Appellants, v. Cross-complainants and Respondents.

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Court of Appeal, Second District, California.

DELTA MARKETING, INC., et al., Plaintiffs, Cross-defendants and Appellants, v. TAKIS STATHOULIS, et al., Defendants, Cross-complainants and Respondents.

B210322

Decided: February 18, 2010

Patrick T. Madden, Judge.   Affirmed in part;  reversed in part.   Law Offices of Harrison Gavin Long and Harrison Gavin Long for Plaintiffs, Cross-defendants and Appellants. Kaiser, Swindells & Eiler, Pamela A. Swindells, Eric C. Demler for Defendants, Cross-complainants and Respondents.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Delta Marketing, Inc. and Jack Abi Fadel sued respondents Takis Stathoulis and Joanne Stathoulis.   Respondents cross-complained.   Judgment was entered for respondents on both the complaint and cross-complaint.   On Delta's complaint, we affirm the judgment in favor of respondents.   On respondents' cross-complaint, we affirm the judgment against Delta, but reverse the judgment against Abi Fadel.

Background

Delta is a dealer in restaurant furniture.   In February 2005, Delta and respondents entered into a contract which provided that Delta would supply custom restaurant booths and other furniture for respondents' new restaurant, Frisco's, for the sum of $102,343.   The parties entered into a second contract in October 2005.   This contract was for additional work, for $17,991.

Respondents were not satisfied with the furniture which was supplied.   Their evidence was that, among other problems, the booths were the wrong sizes and were uneven.   Laminate on the table tops and booth bases was chipped, the vinyl was not smooth, and the stitching looked bad.   Table leaves did not stay up.   Table edges which should have been rounded were square, creating a hazard to customers and to the waitresses, who were on roller skates.   Appellants fixed some of the problems, but not all of them.   Respondents had owned restaurants since 1984, and they observed much more wear in the Long Beach Frisco's than at their other locations.

Respondents paid $92,973 on the two contracts, but did not pay the full amount.   Delta sued for breach of contract and related causes of action, alleging that it had performed on the contract but that it was owed $27,362.   Respondents cross-complained against Delta and Jack Abi Fadel, Delta's President and Chief Operating Officer, bringing causes of action for, inter alia, breach of contract and negligence.1

Trial was to the court, which heard testimony from, among others, Abi Fadel, respondents, individuals involved in manufacturing and installing the furniture, and two experts:  Gilbert Miranda for appellants and Peter Colagrossi for respondents.   There were many exhibits, including plans, photographs, and portions of seats or booths built for, or taken from, Frisco's.

In its Statement of Decision, the court found that “Delivery began in October, 2005.  [Respondents] immediately complained to Abi Fadel about the quality of the booths that were delivered.”   Abi Fadel had incorrectly measured the space, and three booths intended for the southwest corner were too short.   They were removed and replaced, but respondents “were still unhappy with the height of the booths.   There were also height problems with booths” intended for the north and south walls.   These booths were higher than the window sills.   Other booths were too long.   The hostess station did not fit, and another booth was too long.   It extended into a hallway and blocked access to the restrooms.   Respondents also complained about aesthetic problems.   For example, some of the booth bases were made up of “different color laminates, tables were uneven in height, the stitching was poorly done, and the vinyl in some of the booths was wavy.   This is not an exhaustive list of the deficiencies the Stathoulis allege they found with Delta's work.”

The court found that respondents' complaints were “well founded, and the deficiencies were material, not trivial,” and further found that while Abi Fadel promised to rectify some of the problems, no satisfactory remedial work was ever performed.   There remained problems with bases composed of different color laminates, chipped tables, and seats which were too soft.   Some of the tables remained uneven and panels of the booths tended to detach.   The court found that “Delta has not performed its obligations to [respondents] in a workmanlike manner, and that the warranty of merchantability has been breached because the products do not comport with industry standards.”

The court found Colagrossi's testimony credible and persuasive and discounted Miranda's testimony that the restaurant “looked great,” noting that it had viewed the evidence and that the products did not “look great.”   Instead, many looked significantly substandard.   The court wrote, “the court disagrees with the testimony of Mr. Abi Fadel that booth heights and uneven tables are ‘non-issues,’ ” and further found that “the Stathoulis relied on the expertise of Mr. Abi Fadel to provide aesthetically pleasing tables and booths that would be comfortable for customers and efficiently utilize floor space.   Mr. Abi Fadel was well aware of the requirements of the Stathoulis, and the dismissal by Mr. Abi Fadel of the deficiencies as trivial or immaterial is unavailing.   No reasonable restaurant owner would have been satisfied with the performance of Delta.”

The court found that Delta's material breach barred further recovery on the contracts and that Delta had already received full value for the work it performed, and entered judgment for respondents on Delta's complaint.   The court also found for respondents on their cross-complaint, awarding $58,000, the sum which Colagrossi had testified would bring the restaurant up to industry standards.

The court found Abi Fadel personally liable for that sum, finding that he personally took erroneous measurements of the interior of the restaurant, that the measurements were inaccurate and negligently performed, and that the mismeasurement led to many of the difficulties.

Discussion

1. Sufficiency of the Evidence

Appellants first argue that there is no substantial evidence for the rulings on either the complaint or the cross-complaint, and that the evidence instead established that the furniture was properly manufactured to industry standards, that problems were created by the designer hired by respondents and by changes respondents made to the original plans, that any damage was caused by construction in the restaurant and by improper maintenance, and that the restaurant had suffered no more than normal wear and tear.

On a challenge to the substantial evidence for a judgment, “․ the power of an appellate court begins and ends with the determination as to whether, on the entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination, and when two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court.   If such substantial evidence be found, it is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion.  (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.)   Credibility is an issue for the fact finder.   As we have repeatedly stated, we do not reweigh evidence or reassess the credibility of witnesses.  (Johnson v. Pratt & Whitney Canada, Inc. (1994) 28 Cal.App.4th 613, 622.)

We find substantial evidence for the trial court's rulings.   Respondents testified to the problems they observed with the booths, table tops, and seats.   They also called an expert witness who had 40 years of experience in building and/or repairing commercial furniture.   He examined the furniture Delta supplied, and opined, inter alia, that:

- The laminate on the table tops and booth bases was too thin and was improperly installed.   This gave the table tops and booth bases a dirty, bumpy, and shabby appearance, and meant that the laminate could come loose, and would chip easily.

- The table leaves were too small.   They were not flush with the tables when opened, creating a dangerous gap.   Further, they were installed improperly.

- The foam in the upholstery was not commercial grade and was already breaking down.

- The upholstery work was not good.   Welting (which kept the fabric tight and gave the installation longevity) was defective throughout the restaurant.   Some of the seams were already coming apart.   The vinyl on the back of one booth looked like a bag of walnuts.

- The decking between booths and the wall was not installed properly.   Cleats were missing, so that if a child stood on it, the decking would drop.  (Takis Stathoulis testified that while he did not allow children to stand on the decking, it happened all the time.)

Both Colagrossi and respondents themselves testified that the wear was greater than it should have been, given the age of the restaurant.

Colagrossi testified that it would cost $58,000 to bring the restaurant up to industry standards.

Appellants argue that Miranda was better qualified than Colagrossi, and contend that Colagrossi's testimony and the rest of respondents' evidence cannot constitute substantial evidence.   In support, they cite to the evidence which was contrary to Colagrossi's testimony and to respondents' evidence in general.

It is certainly true that the evidence at trial was highly controverted.   Appellants' witnesses contravened almost every point of respondents' evidence.   Their expert, who was also well qualified, disagreed with Colagrossi on the state of the furniture, the manufacturing process, the causes of any problems, and the cost to repair.

To give but a few examples, Jerry Wolford, who installed the booths, testified that the decking was correctly installed and sturdy, and also testified that some of the photographs respondents introduced depicted the restaurant before installation had been completed, not the completed project.

Based on the look of the tabletops, Colagrossi opined that the laminate had been fabricated in a dirty room.   The fabricator testified that the room was clean.   Colagrossi testified that he had measured the tabletop laminate at .31.   Abi Fadel testified that he had measured it at .45.   Appellants' expert, Gilbert Miranda, who also had extensive experience in building and repairing restaurant furniture, gave opinions which were the opposite of Colagrossi's on almost every point.

But, under the well established standard of review, the fact that the evidence was controverted is of no moment on appeal.   The trial court considered the competing evidence, determined the credibility of witnesses, and drew reasonable conclusions.   That is the trial court's province, and not ours.

2. Abi Fadel's liability

Citing Michaelis v. Benavides, the trial court found Abi Fadel personally liable for the entire judgment because he had personally and negligently measured the restaurant, breaching his duty of care to respondents.   (Michaelis v. Benavides (1998) 61 Cal.App.4th 681.)   Appellants contend that the court erred in this respect, and we agree.

In Michaelis v. Benavides, supra, the plaintiffs hired a contractor.   The defendant was president, director, and 50 percent stockholder of that corporation.   The parties stipulated that the defendant was individually negligent and that he owed a duty to the plaintiffs, not just to the corporation.  (Id. at p. 686.)   Here, there was no such stipulation.   Abi Fadel's duty was to Delta, not to respondents.

As the Restatement notes, any broader reading of Michaelis, to further extend individual liability, is potentially at odds with the position taken by Restatement Second, Agency.  (Rest.2d Agency, § 7.02, com. c, p. 139.)

There are, in addition, other problems with the judgment.   First, the evidence was that the mismeasurement caused at most only part of the damages.   Some of the problems resulting from the mismeasurement were remedied by Delta, with replacement booths.   Moreover, Colagrossi testified that $58,000 was the cost to bring the restaurant up to industry standards through the repair or replacement of laminate tabletops, badly done upholstery, and other problems which were not related to mismeasurement.

Next, nothing in the cross-complaint could have indicated to Abi Fadel that respondents were seeking to hold him personally liable for negligence.   Abi Fadel was a cross-defendant, and each and every cause of action in the cross-complaint is brought against all cross-defendants.   Yet, where the causes of action for fraud and negligent misrepresentation include specific factual allegations about Abi Fadel-what he said and what he did-there are no factual allegations about him in the cause of action for negligence.   Instead, the allegations in the cause of action specify that “Cross-defendants Delta and Roes 1 through 20 breached their duty to the cross-complainants to perform their work pursuant to the subject contracts in a professional and workmanlike manner.”   There is no allegation that Abi Fadel either had, or breached, a duty.

In fact, other than broad alter-ego allegations (a theory not advanced at trial), there are no factual allegations anywhere in the complaint that Abi Fadel acted negligently or that he owed a duty to respondents.   Instead, the complaint alleges that Delta had a contract with respondents, that Delta performed substandard work worth less than the amounts respondents paid, that Delta was indebted to respondents, and that Delta was negligent.

Abi Fadel was thus not sued for his personal negligence, and judgment cannot be entered against him on that theory.

Disposition

The judgments in favor of respondents and against Delta on both the complaint and cross-complaint are affirmed.   The judgment against Jack Abi Fadel is reversed.   Each party to bear its own costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

FOOTNOTES

FN1. There were also causes of action for fraud and for negligent misrepresentation, based on allegations that Abi Fadel falsely represented that Delta had its own factory, and manufactured the furniture itself.   The trial court found no misrepresentation of material fact.   There is no issue on appeal concerning these causes of action, and we do not further discuss them..  FN1. There were also causes of action for fraud and for negligent misrepresentation, based on allegations that Abi Fadel falsely represented that Delta had its own factory, and manufactured the furniture itself.   The trial court found no misrepresentation of material fact.   There is no issue on appeal concerning these causes of action, and we do not further discuss them.

MOSK, J. KRIEGLER, J.

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