Filed 6/4/20 Stolp v. Murphy-True, Inc. CA1/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

PHILIP STOLP et. al.,

Plaintiffs and Respondents,

v.

MURPHY-TRUE, INC.,

Defendant and Appellant.

A153637, A154770

(Sonoma County

Super. Ct. No. SCV 255963)

PHILIP STOLP et. al.,

Plaintiffs and Appellants,

v.

MURPHY-TRUE, INC.,

Defendant and Appellant.

A155426

(Sonoma County

Super. Ct. No. SCV 255963)

This construction defect case arises out of a $3 million-plus remodeling project at the home of plaintiffs Philip and Debra Stolp. The first rainy season after the project was completed, the Stolps discovered water leakage and other damage, which ultimately turned out to be extensive. They sued Murphy-True, Inc., the general contractor, and the stucco manufacturer. Murphy-True, in turn, cross-complained against the stucco manufacturer and seven other subcontractors. The Stolps eventually settled with the other parties, except Murphy-True.

Three of the subcontractor settlement agreements included clauses releasing Murphy-True from liability for claims arising out of, or related to, the workmanship of and materials used by these subcontractors. Based on these agreements, Murphy-True asserted “settlement and release” as an affirmative defense and sought to bifurcate and try its defense first. The trial court bifurcated the trial, but ordered the Stolp’s claims against Murphy-True tried first and Murphy-True’s “settlement and release” defense tried second.

The jury thereafter found Murphy-True liable for breach of contract, breach of an implied warranty pertaining to the installation of the exterior windows and doors, and negligence, and awarded $690,000 in damages for breach of contract ($565,000 for cost of repair and $125,000 in prejudgment interest). The court then considered and rejected Murphy-True’s “settlement and release” defense.

During post-trial proceedings, Murphy-True moved for a settlement credit for amounts paid by the three subcontractors to the Stolps and allocated to cost of repair and prejudgment interest. The court denied the motion on the ground the damages awarded at trial were not for one indivisible injury, but rather, were for Murphy-True’s work in connection with the exterior windows and doors. The Stolps, in turn, moved for attorney fees of over $557,000. The trial court awarded slightly more than $222,000.

Murphy-True has appealed from the judgement, claiming error by the trial court in rejecting its “settlement and release” defense and refusing to provide a settlement credit. (Case No. A153637.) The Stolps have appealed from the attorney fee award, claiming the court abused its discretion in awarding less than half the fees they sought. (Case No. A155426.) Murphy-True has cross-appealed from the fee order, claiming the court erred in directing it to remit settlement proceeds paid to it by another subcontractor, and has protectively appealed from the cost award. (Case No. A154770.) We affirm the judgment and the attorney fee order, except as to the directive requiring Murphy-True to remit the settlement proceeds paid to it.

BACKGROUND

In 2005, the Stolps contracted with Murphy-True to remodel and enlarge their residence. The contract stated it was for a “remodel and addition . . . consisting of remodeling the existing house, adding a basement level with an indoor pool, enlarging the lower garage, replacing and enlarging exterior decks, and other improvements.” (Underscoring omitted.) The contract price was for a “maximum amount” of $2,685,868, but with add-ons, the Stolps ultimately paid Murphy-True over $3 million.

As part of the remodeling project, the Stolps entered into two agreements with Bruckner, an Austrian window company. One was a purchase agreement for “exterior window and door systems and selected interior doors,” and the second was a consulting agreement “to assist . . . in the installation” of the windows and doors.

The consulting agreement provided in part: “Consultant agrees to provide on-site consulting services to Owner in connection with the installation of the exterior window and door systems at the job site, including supervision of the installers to be arranged for by Consultant. The scope of work of the services provided hereunder . . . will include (1) installation and final check out of exterior window and door systems, (2) installation of certain interior doors and (3) training of designated employees of [Murphy-True].” The agreement further provided “Consultant shall provide hands-on instruction on the procedures to be used to protect the installed exterior and interior windows and doors from the elements and from physical damage to Owner’s Representative, [Murphy-True’s] site superintendent and [two Murphy-True] personnel designated by Owner’s Representative.”

Debra Stolp testified she sent the contract to Jay True, the project manager for Murphy-True, and asked him to look it over. He “gave me a phrase that he wanted me to install in the contract, which was installed, saying that [Murphy-True] would work with Bruckner and be part of the installation team and that was the final contract.” The purchase agreement with Bruckner also included the provision that “Seller agrees to provide an English-speaking[,] factory-trained representative on[-]site at the job site in order to consult with and provide guidance to Buyer’s contractor’s staff during installation of the products at the job site. Buyer’s contractor retains responsibility for actual installation of the product.”

After the completion of the project and the Stolps had moved back into their home, they started noticing problems, including water leaks, delamination of the stucco, and discoloration.

They eventually sued Murphy-True and CTS Cement Manufacturing Company, which manufactured the stucco. Murphy-True cross-complained against CTS Cement and seven of the subcontractors, including Expert Plastering, Inc., Simpson Sheet Metal, and Capitol Seamless Floors.

The subcontract between Murphy-True and Expert Plastering was for an “[e]xterior stucco system over 2 layers of 60 min paper and galvanized, extra furred wire lath per plan. . . . All concrete walls to receive a brown and finish coat.” The subcontract also included installation of “[b]ituthane door & window openings.” Bituthane is a rubber “asphalt membrane” that is “peel and stick. You literally take the backing off and you can apply it to the walls.” Expert Plastering eventually settled with the Stolps for $205,000. The settlement agreement allocated $150,000 to cost of repair, $15,000 to Stearman damages, $15,000 to loss of use, $10,000 for prejudgment interest, and $15,000 as attorney fees.

The subcontract between Murphy-True and Simpson Sheet Metal specified Simpson would install “copper gutter, copper downspouts, copper leaderheads, flashing and sheetmetal. . . .” A change order added numerous items, including 31 “stainless steel window pans.” Simpson and the Stolps settled for $465,000, allocating $186,000 to “[c]ost of repair for sheet metal and roof issues,” $21,000 to Stearman damages, $114,000 to loss of use, $30,000 for prejudgment interest, and $114,000 as attorney fees.

The subcontract between Murphy-True and Capitol Seamless Floors provided Capitol was to “install waterproofing and flashing at the second and third level decks.” Capitol settled with the Stolps for $450,000. The settlement agreement allocated $395,000 to cost of repair, $10,000 to Stearman damages, $5,000 to loss of use, $5,000 for prejudgment interest, and $35,000 as attorney fees.

The settlement agreements with these three subcontractors also contained release provisions as to Murphy-True, which we set forth in detail in our discussion of its “settlement and release” affirmative defense. The trial court ruled all three were “good faith” settlements under Code of Civil Procedure section 877.6.

Murphy-True thereafter unsuccessfully sought to bifurcate and try first its “settlement and release” affirmative defense. The trial court ordered, instead, that the Stolp’s claims against Murphy-True be tried first before the jury, and Murphy-True’s “settlement and release” defense tried secondly before the court.

In his opening statement before the jury, counsel for the Stolps outlined the scope of the trial, after noting a number of subcontractors had settled and were no longer involved in the case. Counsel stated, “This is only a lawsuit between the Stolps and [Murphy-True] for only the work that Murphy-True . . . was involved in. [¶] . . . The work they were involved in was the installation of the doors and windows in this home.” Murphy-True’s attorney agreed the scope of the trial was limited, stating “Admittedly plaintiffs and their experts are going to contend that there were water intrusion problems at this house. Those issues, to the extent they relate to the windows and doors, are all you will consider in this case.”

Debra Stolp testified about the “extensive remodel” project for which she hired Murphy-True as the general contractor. Part of Murphy’s scope of work was to replace all the doors and windows. The Stolps first experienced water leaks at their remodeled home the winter following completion. After the first heavy rainstorm, “water was really, really coming out” of a light switch. They notified Murphy-True, and the problem was supposedly remedied. However, in succeeding years, there continued to be water leaks whenever there was a heavy rainstorm. There were leaks in the garage ceiling, pool hallway, pool room ceiling, and staircase. Debra Stolp explained, Murphy-True kept “coming out trying to figure out what it was and doing things to patch it. We thought, okay, it looks like we got it this time, and then it rained.” In the six to seven year time frame following the Stolp’s return to the house after the remodel, Murphy-True returned around 15 times to repair water leaks.

The house continued to leak, and the Stolps finally hired a forensic expert to determine “how this house was leaking” and a contractor to oversee the forensic work and repair work.

Terry Klein, the Stolp’s forensic expert, testified the exterior doors and windows were “within the scope of the project that the Stolps hired Murphy-True to do.” According to Klein, the windows were not “put in the hole squarely and you’re looking at some material . . . that had been shoved in that gap to provide an air barrier, a dam of some sort to fill that gap. What we found . . . was there were big areas where there was no foam put in there and now there was a big pocket where water did get behind the system, it could go in there and sort of pool.” Klein testified “they had shoved every kind of thing in these holes [around the windows]. [There were] little strips of foam that got shoved in there.” The foam was not, however, “a recognized material for waterproofing.”

Klein was asked in regard to Bruckner: “Assuming [Bruckner] had flown a team of individuals to the Stolp residence to look at every rough opening for a window and door before it was installed and had approved of Murphy-True’s framing on every window and door . . . would you still be critical of Murphy-True’s framing?” Klein responded: “Yes. As soon as you pick the window up and shove it in the hole, it doesn’t fit. I don’t know what your drawing says, I don’t care if you inspect it, if you’re trying to shove a round peg in a square hole, it doesn’t fit. You have to change something.” As to the exterior door on the upper deck, Klein testified: “There was supposed to be a pan . . . but there was no pan. [¶] . . . [T]he way the door was framed, a pan wouldn’t [fit], so they just left it out rather than fix the fram[e].”

Klein opined the installation of the windows was defective. “Obviously, there were some large areas that when the window was put in it did not fit tightly . . . the material that was put in there, didn’t help, and it wasn’t put in there consistently. Had it been the right material, it wouldn’t have worked. There were holes there. My criticism is it was done poorly by whoever did it and it was very obvious you could see it from several feet away.” Moreover, regardless of who did the actual installation, “[a]t the end of the day, the general contractor is the guy whose name is on the line, the buck stops with him. If he didn’t install it, but he saw it was done wrong, he has to say something. You can’t walk away from it.”

William Irvin, the general contractor who oversaw the forensic and repair work, also testified the window openings “had been framed in too wide and too tall. And the materials and the windows that were being used to seal off the windows were the incorrect materials to have been used.” The twelve exterior doors were all “supposed to have pans underneath them,” but there were “no pans at all on any of them.” As with the windows, “the openings were too wide for the actual doors, so it left very large gaps on the sides and the top. And again, they were filled in with product that were not designed for weatherproofing.” Of the 38 windows, only nine or ten did not leak. Irvin also found “areas where it appeared that somebody had come in and attempted to repair water leaks into the window.” There was “a product that was injected into the windows.” “[C]aulk that was injected into the window and around the window [¶] . . . [as] part of the repair that was attempted,” that repair did not work.

Irvin further testified the general contractor is “responsible for everything,” and has “an obligation to supervise all of the work of the subcontractors that are working under the general contractor,” as well as work done by “independent contractors who are not directly hired by the contractor, as long as that work is within the scope of the general contractor’s contract.” In his opinion, Murphy-True did not properly supervise and oversee the installation of the windows. Murphy-True was “obviously there and they should have known this was not going to work [¶] . . . [¶] . . . [and] it did not work.” Irvin also testified Murphy-True “definitely helped out” with the window installation, noting “[t]hey have invoices showing that.”

Irvin and the Stolps’s architect, Brian Neumann, determined “the only product that would actually resolve the questions and the issues of future leaking” was Prosoco. Prosoco is a “liquid applied membrane that could go over the whole building, and it would basically act as a new skin and leave the windows in place. . . .” Prosoco is “an all-or-nothing product. You have to put it on walls and windows. There has not to be an inch of exposed plywood anywhere on the property.” Prosoco creates “a waterproof membrane that would protect water from getting into the home. . . .” The total cost of installing the Prosoco was $565,000.

Murphy-True also called experts. Kory Kruckenberg, the owner of a “litigation support construction defect company,” testified as an expert “in the fields of construction and construction management.” He was critical of the testing done by the Stolp’s experts, stating “it was incomplete” and no investigation had been done to “verify the causation of the leak.” Kruckenberg opined the “interior finishes, via drywall, via plaster” should have been removed. Because of this omission, in his opinion, “there’s no way to determine whether the product itself failed, the flashing around the window failed, the installation in the ceilings failed. There’s just no way to tell what went wrong there.”

Kruckenberg disagreed that the window openings had been framed too large. He acknowledged the foam sealant used around the windows “has no waterproofing capability at all. In fact, it’s been known to break down in water.” In his view, Bruckner was responsible for “providing . . . the foam, the Gortex taping, [and] the brackets” around the windows. He also agreed the doors “were supposed to have a pan, and then a waterproofing assembly that would integrate with that pan,” but “[t]he as-built condition was that there were no pans on any of the doors to the exterior decks.” Kruckenberg further testified “it appeared the waterproofer made an effort at that area to terminate in a fashion that would act as a pan.” “It’s not a great design, but if it’s waterproofed properly, it would work, I suppose.” The integration of “all of these waterproofing mechanisms” with the stucco, lathe wire and cast stone was done by other subcontractors.

In Kruckenberg’s view, “as it relates to a product, if it wasn’t purchased by them, I would say the general contractor would have no obligation to validate the product. As to an installation, I think they still have–I mean they’re the general contractor, they still have the liability of how it’s installed. I think their role at that point is really supervision and just to insure that the product is functioning as it’s supposed to, insure that to the best of what they can see is matching on the plans or it’s being flashed properly at that time. So I think they still have some obligation there.” But he added, “I have not seen damages as it relates to any window failures and I have not seen any conclusive testing related to windows.” He opined that “these windows were installed according to plans and they appear to function properly.” He admitted, however, he did not personally inspect the doors and windows, but observed the residence “from the street” a “[c]ouple of hundred feet” away.

George Polley, Murphy-True’s project superintendent, testified the company’s only involvement with the windows and doors was framing the door and window openings, installing interior doors, unloading the Bruckner doors and windows from a truck and bringing them to the job site, and assisting Bruckner employees with moving the windows. He did not “perform any type of inspection or investigation of the manner in which the exterior doors were installed” only “[o]pening and closing them to make sure they open and close.”

Polley testified Capitol Seamless Floors “did the back wall waterproof[ing], for retaining walls and they did the horizontal waterproofing for the exterior deck,” which included “running the waterproofing membrane up and above the [door] threshold [¶] . . . [¶] . . . and up onto the wall.” He denied Murphy-True installed the waterproofing system on the windows, explaining “after the flashing was installed by the Bruckner people that tied their flashing to their window,” Expert Plastering “tied” its “waterproofing system to their flashing.” Polley was never aware of any water intrusion issues at the doors or windows.

Stephen Ronchelli, the vice-president of Jim Murphy and Associates, testified as to a number of change orders made regarding the remodeling contract. The first “added the Bruckner doors and windows into our scope of work,” and the second “takes it back out of our scope of work.” There was a third change order for “ ‘window and door, handling, $9,511,’ ” but Ronchelli testified that charge did not “relate in any way to the installation of the windows.” Another change order stated Murphy-True “ ‘supplied window and door installation, labor and equipment . . . $7,319,’ ” Ronchelli testified no portion of that amount related to “the actual installation of the windows.” Ronchelli was also aware of “a couple of leaks” that resulted in “warranty work or call-back work” by Murphy-True. He was not aware of any complaints about the windows.

Murphy-True’s principal defense in the first phase of the trial was that neither its own work, nor its supervision of Bruckner’s work, was inadequate in any way because there simply were no defects in the installation of the windows. Its counsel maintained the Stolps “didn’t introduce any evidence that the rough openings were deficient in any fashion.” Counsel further maintained there were no actual damages attributable to installation of the doors and windows, because there was “no competent, persuasive evidence” that “the doors and windows leaked at the time they were originally installed by Jim Murphy.”

To the extent there were problems with the windows and doors, it was Murphy-True’s position they were created by the subcontractors or by the repair work, itself. Polley, Murphy-True’s superintendent, testified both Expert Plastering and Capitol Seamless Flooring did certain waterproofing work that was “tied” into the windows or doors and thus, Murphy-True maintained that work was the source of the problem. As for the framing issues, Murphy-True’s attorney asserted, the gaps in the foam around those windows did “not reflect the original condition of this project,” and instead “the ravaged conditions of the doors and windows . . . were created during the course of ripping the stucco system off the property.” This, counsel asserted, was the fault of the “stucco contractor,” who had “settled.”

The jury found Murphy-True breached its contract with the Stolps, breached an implied warranty the windows and doors would be competently installed, and was negligent. It awarded $690,000 in damages for breach of contract ($565,000 for cost of repair and $125,000 in prejudgment interest), but awarded no damages for the breach of implied warranty or negligence. The trial court subsequently awarded the Stolps $222,202.75 in attorney fees.

DISCUSSION

Murphy-True’s “Settlement and Release” Defense

Murphy-True claims the trial court erred in rejecting its “settlement and release” defense based on the release language in the Expert Plastering, Simpson Sheet Metal, and Capitol Seamless Flooring settlement agreements. Murphy-True maintains the “broad language” in these settlement agreements, “wherein the Stolps agreed to release [Murphy-True] from any and all claims ‘arising out of’ or ‘relating to’ the workmanship or materials furnished by Expert, Simpson, or Capitol,” extinguished the Stolp’s claims against Murphy.

“Under subdivision (a) of section 877 of the Code of Civil Procedure, a release given in good faith to a tortfeasor ‘shall not discharge any other such party from liability unless its terms so provide. . . .’ In determining whether the ‘terms so provide’ [citation], we apply the same rules that govern any other contract. (See Civ. Code, § 1635 [‘All contracts . . . are to be interpreted by the same rules, except as otherwise provided by this Code’] [citations].) A third party beneficiary may enforce a contract made for its benefit. (Civ. Code, § 1559.) However, ‘[a] putative third party’s rights under a contract are predicated upon the contracting parties’ intent to benefit’ it. [Citation.] Ascertaining this intent is a question of ordinary contract interpretation. [Citation.] Thus, ‘[t]he circumstance that a literal contract interpretation would result in a benefit to the third party is not enough to entitle that party to demand enforcement.’ [Citation.] Under long-standing contract law, a ‘contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ (Civ. Code, § 1636.) Although ‘the intention of the parties is to be ascertained from the writing alone, if possible’ (id., § 1639), ‘[a] contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates’ (id., § 1647). ‘However broad may be the terms of a contract, it extends only to those things . . . which it appears that the parties intended to contract.’ (Id., § 1648.)” (Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 524.)

We therefore turn first to the language of the three settlement agreements.

The settlement agreement between the Stolps and Expert Plastering provided in pertinent part: “This Release and the releases contained herein are intended by the parties hereto to operate and to provide a complete EXPERT Scope of Work release by STOLP to EXPERT and [Murphy-True] and shall discharge any and all claims and/or potential claims as to EXPERT and [Murphy-True] for any and all work connected to, related to, or arising out of EXPERT’S work, services, labor, material, equipment and/or construction, fabrication and/or installation of material or products at the Project. [¶] . . . This Release shall not release [Murphy-True] for damages caused by the work of any other subcontractor, material supplier and/or any other culpable entity or individual who is not a party to this Release, or for damages outside the scope of this Release.”

The Expert release further provided: “Additionally, STOLP hereby release[s], acquit[s] and forever discharge[s] [Murphy-True] . . . from any and all claims, actions, causes of action, demands, rights, damages, costs, expenses and compensation (including attorney’s fees and costs) arising [from] or related to EXPERT’S Scope of Work on the Project. This Release does not release [Murphy-True] from any other work which may have been performed by contractors other than EXPERT, does not purport to release [Murphy-True] from any other work self-performed by [Murphy-True] and does not purport to release [Murphy-True] from claims of improper oversight or supervision of subcontractors, other than such claims that may apply to [Murphy-True’s] oversight or supervision of EXPERT’S Scope of Work, which claims were never raised and which are released herein.”

The settlement agreement between the Stolps and Simpson Sheet Metal similarly provided in part: “This release and the releases contained herein are intended by the parties hereto to operate and to provide a complete release by STOLP to the SETTLING SUBCONTRACTORS and [Murphy-True] of all claims arising from or related to the SETTLING SUBCONTRACTORS’ Scope of Work and shall discharge any and all claims and/or potential claims as to the SETTLING SUBCONTRACTORS and [Murphy-True] for any and all work connected to, related to, or arising out of the SETTLING SUBCONTRACTORS work, services, labor, material, equipment and/or construction, fabrication and/or installation of material or products at the Project.” The settlement agreement provided “SIMPSON’S specific scope of work at the Project, under [Murphy-True’s] supervision as the general contractor, is set forth in the Subcontract between [Murphy-True] and SIMPSON for the Project, as well as certain oral and written Change Orders. . . . The work completed by SIMPSON at the Project is hereinafter referred to as ‘SIMPSON’s Scope of Work.’ ”

The Simpson settlement agreement further provided as to Murphy-True: “This Release shall not release [Murphy-True] for damages caused by the work of any other subcontractor, material supplier and/or any other culpable entity or individual who is not a party to this Release, including [Murphy-True], or for damages outside the scope of this Release.” “STOLP hereby releases, acquits and forever discharges [Murphy-True] . . . from any and all claims, actions, causes of action, demands, rights, damages, costs, expenses and compensation . . . arising [from] or related to SETTLING SUBCONTRACTORS’ Scope of Work at the Project. This Release does not release [Murphy-True] from (1) any other work which may have been performed by contractors or subcontractors other than SETTLING SUBCONTRACTORS, (2) any other work self-performed by [Murphy-True], including [Murphy-True’s] installation of materials provided by the SETTLING SUBCONTRACTORS, and (3) any claims of improper oversight or supervision of subcontractors, other than such claims that may apply to [Murphy-True’s] oversight or supervision of SETTLING SUBCONTRACTORS’ Scope of Work, which claims were never raised and which are released herein. STOLP does not release [Murphy-True] for any work relating to framing, window installation or door installation at the Project.”

The settlement agreement between the Stolps and Capitol Seamless Flooring settlement agreement provided in pertinent part: “The STOLPS . . . do fully and forever completely release and discharge . . . CAPITOL, and all other individuals and/or entities identified in SECTION 1.6 and each of their RELATED PERSONS OR ENTITIES. . . .” Section 1.6 provided in part: “ ‘SCOPE OF WORK’ ” . . . shall refer to and include all work of . . . CAPITOL performed and/or contracted to perform at the SUBJECT PROPERTY; and all work, issues and/or . . . CLAIMS relating to or arising out of the exterior deck systems on the second and third floors (the ‘DECK’ or ‘DECKS’) at the SUBJECT PROPERTY, including, without limitation, . . . all work of [Murphy-True] relating to the DECKS, including the framing relating to the DECKS only and CLAIMS relating to the substrate of the DECKS (no other claims against [Murphy-True] are being released other than work relating to the DECKS). . . .”

Murphy-True acknowledges these provisions limit the claims as to which it was released, but asserts the Stolps “fail[] to explain how this [limiting] language ‘carves out’ the claim [i.e., allows them to proceed against Murphy-True on the claim] of waterproofing deficiencies at exterior windows and doors.” (Italics omitted.) Murphy-True interprets the language of the releases as follows: “Reasonably construed, the language cited by [the Stolps] simply states that [Murphy-True] is not released from claims ‘arising out of’ or ‘relating to’ [Murphy-True’s] own self-performed work installing windows and doors, unless of course, the same claim also ‘relates to’ or ‘arises out of,’ at least in part, the workmanship or materials furnished by Simpson, Expert, or Capitol, in which case the claim is fully released against [Murphy-True].”

Murphy-True seemingly overlooks both the specificity of the limitations in the releases and the limited nature of the claims the Stolps pursued at trial.

“ ‘[W]hen general and specific provisions of a contract deal with the same subject matter, the specific provisions, if inconsistent with the general provisions, are of controlling force.’ ” (Continental Casualty Co. v. Zurich Ins. Co. (1961) 57 Cal.2d 27, 35.) Thus, the specific language in the settlement agreements defining and limiting the claims that were released is controlling.

As we have recited, the Expert Plaster settlement agreement specified it did not release Murphy-True from claims based on “any other work which may have been performed by contractors other” than Expert, from claims arising “from any other work self-performed” by Murphy-True, or from “claims of improper oversight or supervision of subcontractors,” other than claims pertaining to Murphy-True’s “oversight or supervision of” Expert within Expert’s contracted “Scope of Work.”

The Simpson Sheet Metal settlement agreement likewise specified it did not release Murphy-True from claims for “any other work” performed by other subcontractors or material suppliers, claims for “work self-performed by” Murphy-True (including Murphy-True’s own “installation of materials provided by” Simpson), or “any claims of improper oversight or supervision of subcontractors, other than” claims pertaining to Murphy-True’s oversight or supervision of Simpson within Simpson’s contracted “Scope of Work.” The agreement also explicitly stated it did not release Murphy-True from liability for “any work relating to framing, window installation or door installation.”

The Capitol Seamless Flooring settlement agreement similarly resolved only claims “relating to or arising out of the exterior deck systems on the second and third floors,” including “all work of” Murphy-True “relating to the DECKS,” including the deck framing and substrate of the decks. “[N]o other CLAIMS” against Murphy-True were released.

Thus, the plain language of these provisions did not release Murphy-True from liability for claims based on the framing or installation of the exterior windows and doors or from claims based on inadequate work by Bruckner or Murphy-True’s inadequate supervision of Bruckner. Indeed, none of the three settling subcontractors installed the exterior windows and doors. Rather, the Stolps presented ample evidence that Murphy-True did the framing for these windows and doors and did so in such a deficient way the doors and windows could not be made watertight, and that Murphy-True was also responsible for supervising and verifying Bruckner’s work in installing the windows and doors but failed to adequately do so.

Murphy-True continues to insist that the source of the problem was work by Expert Plastering, Simpson Sheet Metal, and/or Capitol Seamless Flooring, not its own work or Bruckner’s work. As we have recited, it presented some (but certainly not an abundance of) evidence in support of this claim. However, the Stolps presented evidence that it was Murphy-True’s own negligent construction work and its failure to adequately supervise Bruckner that allowed the windows and doors to become a source of water intrusion. Thus, given the conflicting evidence, it was up to the jury to decide whether the water intrusion associated with the exterior windows and doors was caused by Murphy-True’s own negligent work and/or failure to adequately supervise Bruckner, or by inept work by the subcontractors. The jury found in favor of the Stolps.

At oral argument, counsel for Murphy-True urged that the trial court had procedurally erred in not holding further trial and taking additional evidence on Murphy-True’s “settlement and release” affirmative defense. Counsel acknowledged, however, that no offer of proof had been made in the trial court as to the additional evidence Murphy-True would have offered. We therefore have no way of determining whether Murphy-True suffered any prejudicial error in this regard.

Accordingly, given the limited language of the release provisions, and the evidence presented at trial and the jury’s findings in favor of the Stolps, the trial court did not err in rejecting Murphy-True’s “settlement and release” affirmative defense.

Settlement Credit

Murphy also maintains the trial court erred in failing to offset the judgment against it by $755,000, the total amount of the Expert Plaster, Simpson Sheet Metal, and Capitol Seamless Flooring settlements allocated to cost of repair and prejudgment interest. Had the trial court done so, the result would have been a net zero judgment against Murphy-True.

“ ‘We generally review a ruling granting or denying a [Code of Civil Procedure] section 877 settlement credit under the deferential abuse of discretion standard. [Citation.] To the extent that we must decide whether the trial court’s ruling was consistent with statutory requirements, we apply the independent standard of review.” (LAOSD Asbestos Cases (2018) 28 Cal.App.5th 862, 880.)

Code of Civil Procedure section 877 provides in part: “Where a release, dismissal with or without prejudice, or a covenant not to sue or not to enforce judgment is given in good faith before verdict or judgment to one or more of a number of tortfeasors claimed to be liable for the same tort, or to one or more other co-obligors mutually subject to contribution rights, it shall have the following effect: (a) It shall not discharge any other such party from liability unless its terms so provide, but it shall reduce the claims against the others in the amount stipulated by the release, the dismissal or the covenant, or in the amount of the consideration paid for it, whichever is the greater. (b) It shall discharge the party to whom it is given from all liability for any contribution to any other parties.” (Code Civ. Proc., § 877, subds. (a)-(b).)

The setoff provided by Code of Civil Procedure section 877 applies whenever the acts of multiple tortfeasors “ ‘have combined to cause “one indivisible injury.” ’ ” (Greathouse v. Amcord, Inc. (1995) 35 Cal.App.4th 831, 840.) It is therefore not unusual in construction defect cases that settlement credits are not given for settlements involving discrete aspects of the project involving discrete work by subcontractors specializing in specific trades. (See e.g., Bobrow/Thomas & Associates v. Superior Court (1996) 50 Cal.App.4th 1654, 1661 [“If [owner’s] injury were divisible, as might be injury which included both flooring damage and damages caused by defective wiring . . . [owner] could settle with the flooring defendants and then proceed against BTA for problems connected with the design of the wiring. BTA could not then hold the flooring defendants responsible for any part of the . . . recovery . . . .”].)

Ultimately, settlement credits are predicated on the principle that while a plaintiff is entitled to full compensation for his or her proven injuries, he or she is not entitled to a “double recovery” of these damages. (See Poire v. C.L. Peck/Jones Brothers Construction Corp. (1995) 39 Cal.App.4th 1832, 1840 [the “ ‘fundamental purpose’ ” of a settlement credit under Code of Civil Procedure section 877 “ ‘is to preclude a double recovery arising out of the same wrong.’ ”]; Hoch v. Allied-Signal, Inc. (1994) 24 Cal.App.4th 48, 67, [“When multiple defendants are responsible for the same compensatory damages, a setoff . . . is required by the fundamental principle that ‘. . . a plaintiff may not recover in excess of the amount of damages which will fully compensate him for his injury.’ ” [Citation.].)

Murphy-True asserts there was but one “indivisible injury” in this case, which it calls the “waterproofing claim.” And in this regard, it claims the “application of the Prosoco waterproofing product . . . served to repair all of the waterproofing deficiencies at the exterior windows and doors.” (Italics omitted.)

However, as we have discussed, the claims against each of the three settling subcontractors were different. The Expert Plaster settlement agreement stated it pertained solely to Expert’s scope of work, which was generally “install[ation] [of] the exterior stucco system.” The Simpson Sheet Metal settlement agreement with Simpson indicated the settlement was for “repair for sheet metal and roof issues.” The Capitol Seamless Flooring settlement agreement with Capitol specifically said it was for work on the “exterior deck systems on the second and third floors.” In short, these settlements were typical of those in a sizeable, multi-faceted construction defect case, where subcontractors resolve only the claims based on their particular work on the project. None of these settlements were for defective installation of the exterior windows and doors.

As the trial court commented with respect to “indivisibility” of the injury, “[Murphy-True] attempts to characterize the damages incurred as the ‘repair costs caused by defective construction’ and therefore, the damages constituted a ‘single indivisible injury.’ However . . . the damages that [the Stolps] sought and recovered from [Murphy-True] at trial were distinctly related to costs incurred to apply the ‘Prosoco’ waterproofing, not generally for [the] costs to repair all defective construction.” The record amply supports this observation.

Accordingly, the trial court did not abuse its discretion in refusing to offset the judgment against Murphy-True by settlement amounts paid by Expert Plaster, Simpson Sheet Metal, and Capitol Seamless Flooring.

Attorney Fees

The Stolps claim the trial court abused its discretion in awarding them only $222,202.75 in attorney fees, rather than the $557,441.75 they sought. Murphy-True claims, in its cross-appeal, the court erred in ordering it to turn over to the Stolps $4,017.25 of the settlement proceeds it received from a plumbing subcontractor.

We review the amount of an attorney fee award, including any apportionment of fees, for abuse of discretion. (See Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175 [“ ‘On review of an award of attorney fees after trial, the normal standard of review is abuse of discretion.’ ”].) “ ‘Once a trial court determines entitlement to an award of attorney fees, apportionment of that award rests within the court’s sound discretion.’ ” (Calvo Fisher & Jacob LLP v. Lujan (2015) 234 Cal.App.4th 608, 628 (Calvo).) “[A] trial court has discretion to apportion or not apportion attorney fees depending upon the facts and circumstances before it.” (Ibid.) “ ‘The burden is on the party complaining to establish that discretion was clearly abused and a miscarriage of justice resulted.’ ” (Ibid.)

By way of additional background, the Stolp’s contract with Murphy-True contained an attorney fee provision, entitling the prevailing party to reasonable fees and costs. However, each of the three subcontractor settlement agreements with which we have been concerned, released Murphy-True from attorney fees and costs “arising [from]” or “relat[ed] to” the subcontractor’s scope of work.

Thus, after entry of judgment, the Stolps moved for an award of $518,926 in contractual attorney fees. They calculated this amount by subtracting the amount of the subcontractors’ settlements allocated to the Stolp’s attorney fees (totaling $275,000) from the total amount of fees they incurred ($793,926). In addition, the Stolps sought $4,017.25 allocated to their attorney fees in a separate settlement agreement between Murphy-True and another subcontractor, Sweet Water Plumbing.

Prior to the hearing on the Stolp’s fee motion, the trial court issued an order stating, “Plaintiffs’ settlement agreements with the respective subcontractors expressly and unambiguously released [Murphy-True] from all attorneys’ fees ‘arising from or related to’ the scopes of work of those settling subcontractors.” It then stated, the Stolps “have repeatedly included fees in their request that arise from or are related to the scopes of work of the settling subcontractors and subsequent litigation against those subcontractors. Thus, these fees are not ‘inextricably intertwined’ with the fees incurred to prosecute the case against [Murphy-True], were released as part of [the Stolps] settlement agreements with the subcontractors, and should be . . . allocated out of [the Stolp’s] fee request and any subsequent award. Accordingly, the Court invites [the Stolps] to file a supplemental declaration that identifies and removes any attorneys’ fees incurred to litigate claims ‘arising from or related to’ the settling subcontractors’ respective scopes of work. . . .”

The Stolp’s attorney duly filed a supplemental declaration stating the amount of fees “that relate[] solely to the prosecution of claims by [the Stolps] against [Murphy-True] (i.e. doors and windows) . . . total $272,847.50.” Counsel additionally identified $379,458.50 in fees that were assertedly “inextricably intertwined between [Murphy-True’s work] and the settling subcontractor’s respective scopes of work.” Of these fees, the Stolps requested that 75 percent ($284,594.25) be apportioned to their claim against Murphy-True. Accordingly, the Stolps now claimed total fees of $557,441.75, which exceeded the amount they initially sought. The Stolp’s attorney also suggested that $4,017.25 of the $7,500 allocated to the Stolp’s fees in the Sweet Water Plumbing settlement be apportioned to their claim against Murphy-True and asked for a directive that Murphy-True remit that portion of the settlement proceeds to the Stolps.

The trial court rejected the Stolp’s proposed apportionment. Pointing out that the three subcontractor settlement agreements released Murphy-True from “any and all attorneys’ fees ‘arising from or related to’ the scopes of work for the respective settling subcontractors,” (italics added) the court concluded, “This language can only be reasonably interpreted to mean that the parties intended to release fees incurred ‘arising from or related to’ the respective subcontractor’s work, even if those fees were also related to or ‘inextricably intertwined’ with fees incurred to prosecute claims against [Murphy-True].” The court additionally examined the documentation submitted in support of the $272,847.50 in fees the Stolp’s claimed related solely to the prosecution of their claim against Murphy-True and found not all of these fees “solely related to [the Stolp’s] claims against [Murphy-True] and the ‘doors and windows.’ ” The court awarded the Stolps $218,185.50 in fees.

The Stolps then moved for “clarification or, in the alternative, reconsideration” of the fee award. The court “confirm[ed] its . . . ruling . . . with one exception: The Court orders [Murphy-True] to disburse $4,017.25 from the Sweet Water Plumbing funds to [the Stolps].”

On appeal, the Stolps maintain they “do not disagree that the attorneys’ fees arising from or related to the scopes of work of those Settling Subcontractors are released.” Their “contention,” say the Stolps, “is not that the trial court misinterpreted the settlement agreement, but that the trial court ignored that there were fees incurred pre-trial that directly related to the prosecution of claims against [Murphy-True].” They then advance the same argument they did in the trial court—that fees “inextricably intertwined” in litigating their claims against the subcontractors and their window and door claim against Murphy-True should have been apportioned, and they should have recouped 75 percent of these fees from Murphy-True. As they did in the trial court, the Stolp’s ground their 75 percent apportionment figure on the “declaration of their expert (William Irvin) that ‘I spent well over half of my time as the head forensic contractor diagnosing and coming up with repair solutions relating to the extensive window and door leaks that permeated the entire residence.’ ” Irvin additionally stated, “Most of my conferences with the Buchalter law firm that prosecuted this case were primarily focused on the window and door issues.”

The fact the Stolp’s contractor that oversaw the forensic testing and the repair work spent over half of his time on solutions to the water intrusion through the windows and doors, does not lead to the conclusion that 75 percent of the “inextricably intertwined” attorney fees incurred prior to trial should be apportioned to their claim against Murphy-True. Indeed, the Stolps have demonstrated no connection between the percentage of time their contractor devoted to solving the window and door problem and the percentage of time their attorneys spent litigating the case that could fairly be apportioned to their claim against Murphy-True.

Furthermore, the Stolps fail to recognize that, through the settlement agreements, they accepted payment for, and thus conclusively resolved, their claim for all the attorney fees “arising [from] or related to” the work of these settling subcontractors. Notably, the settlement agreements did not specify that the fees settled were limited to those fees that pertained solely and exclusively to litigating the claims against the settling subcontractors. Accordingly, as the trial court ruled, the fact that all the fees—“arising [from] and related to” litigating the settling subcontractors’ work—may also have been “related to” litigating claims against other subcontractors or Murphy-True, does not entitle the Stolps to recover a hefty portion of these fees a second time by way of a post-trial fee motion.

In sum, it is clear from the record that the trial court carefully and thoroughly considered the Stolp’s motion for attorney fee as it pertained to the fee claims they settled, and additional fees they incurred solely in connection with litigating their claim against Murphy-True. Accordingly, they have failed to meet their burden of establishing that, in this respect, the trial court’s “ ‘discretion was clearly abused and a miscarriage of justice resulted.’ ” (Calvo, supra, 234 Cal.App.4th at p. 628.)

We therefore turn to Murphy-True’s cross-appeal and claim that the trial court erred in determining the Stolps were entitled to a portion of the settlement proceeds paid to Murphy-True by Sweet Water Plumbing.

The Sweet Water Plumbing settlement agreement, reached after multiple mediation sessions, provided that Sweet Water would pay Murphy-True $70,000, and allocated this amount as follows: $40,000.00 “for economic damages associated with the repair of the exterior decks,” $5,000.00 “for plaintiffs’ loss of use,” $2,500.00 “for plaintiffs’ Stearman damages,” $7,500.00 “for plaintiffs’ attorney’s fees/costs of suit,” $2,500.00 “for plaintiffs’ prejudgment interest,” $10,000.00 “for [Murphy-True’s] Attorney’s fees,” and $2,500.00 “for [Murphy-True’s] costs of suit.”

Murphy-True maintains the amount allocated to the Stolp’s fees and costs was “simply allocated amongst the Stolp’s various claims for purposes of a ‘good faith’ settlement determination,” (boldface & italics omitted) and the allocation did not require Murphy-True to pass on this amount of the settlement proceeds paid to it by Sweet Water, to the Stolps.

As we have set forth, the settlement agreement was between Murphy-True and Sweet Water, and required Sweetwater to pay to Murphy-True the amount of $70,000. The Stolps have identified no language in the agreement even suggesting, let alone requiring, Murphy-True to pass on to the Stolps any part of these settlement proceeds.

Sweet Water and Murphy-True allocated the $70,000 amount Sweetwater paid to Murphy-True among all of the damages claimed by the Stolps—cost of repair, loss of use, and Stearman damages, as well as prejudgment interest and fees and costs. And Sweet Water and Murphy-True understandably did so in anticipation of a motion for a “good faith” settlement determination. (See generally, Smith-Chavez, et al., Cal. Civ. Prac. Real Property Litigation (2019) § 9:28 [“The factors that must be considered in deciding whether or not a settlement was in good faith are set out in Tech-Bilt : [¶] (1) a rough approximation of plaintiff’s total likely recovery and the settling party’s proportionate liability; [¶] (2) the allocation of settlement proceeds among the plaintiffs; [¶] (3) a recognition that the settling party should pay less in settlement than after a finding of liability at trial; [¶] (4) the financial condition and insurance policy limits of the settling defendants; and [¶] (5) the existence of collusion, fraud, or tortious conduct intended to injure the interests of the nonsettling defendants.”].)

In short, the Sweet Water settlement agreement’s purpose was to reimburse Murphy-True for amounts Murphy-True was potentially liable for, and would potentially have to pay to the Stolps, for defective plumbing work by Sweet Water. Indeed, if the parties intended that Murphy-True was required to pass on to the Stolps any of the settlement proceeds paid to it by Sweet Water, the settlement agreement could have, and undoubtedly would have, said so. The Stolps were represented by highly experienced counsel, and we have no doubt that had they been entitled to any of these settlement proceeds, such a provision would have been included in the settlement agreement.

Indeed, the Stolp’s assertion that Murphy-True was required to pass on to them the amount allocated in the settlement agreement to “their” attorney fees and costs, would apply equally to all the allocations for “their” losses, i.e., the $40,000.00 for economic damages associated with the repair of the exterior decks, the $5,000.00 for their loss of use, the $2,500.00 for their Stearman damages, and the $2,500.00 for their prejudgment interest. Yet, the Stolps have never claimed they were entitled to $57,000 of the settlement proceeds, and Murphy-True to only the $12,500 allocated to its own attorney fees and costs.

We therefore conclude the Stolps failed to demonstrate their entitlement to any part of the Sweetwater settlement proceeds, and the trial court abused its discretion in ordering Murphy-True to remit part of those proceeds to the Stolps.

DISPOSITION

The judgment is affirmed. The order awarding attorney fees is affirmed except to the extent it orders Murphy-True to remit to the Stolps $4,017.25 of the Sweetwater settlement proceeds. The parties to bear their own costs on appeal.

 

_________________________

Banke, J.

We concur:

_________________________

Margulies, Acting P.J.

_________________________

Sanchez, J.

A154770, A153637, A155426; Stolp v. Murphy-True