London Guarantee & Accident Co. v. Las Lomitas School District

HOYT, J. pro tem.

*

Defendant-appellant Las Lomitas School District of San Mateo County contracted with the firm of Achterman and Olesen for the construction of the Ladera Elementary School. In the course of construction Achterman and Olesen encountered financial difficulties and were unable to complete the work. Plaintiff, cross-appellant, London Guarantee and Accident Company, Limited, having written the faithful performance bond, assumed the contractor’s obligations under the contract and completed it.

The contract originally called for completion on April 29, 1953, but the time was extended 22 days to May 21, 1953. The contract contained a liquidated damages clause which provided $25 per day for each day’s delay in the completion of the work. The trial court found that there were 107 days of

[425]

delay. The school district had previously determined that there were 154 days of delay and accordingly had deducted $3,850 as liquidated damages from the final payment to London Guarantee. In support of its finding of 107 days of delay the trial court found that the contract was “substantially completed” on September 5, 1953; that the district wrongfully failed to make payment of $1,175 that became due on October 10, 1953; and that that amount plus interest from that date was owing to London Guarantee. Judgment was rendered accordingly.

The defendant school district appealed from this judgment and the London Guarantee cross-appealed. The London Guarantee Company claims that no damages should be assessed. The trial court applied a theory of “substantial completion.” The school district seeks damages up to the time of actual completion.

The London Guarantee relies upon

Gogo

v.

Los Angeles etc. Flood Control Dist.,

45 Cal.App.2d 334 [114 P.2d 65], That case establishes the following rule concerning liquidated damages: “The correct rule is that where such delays are occasioned by the mutual fault of the parties the court will not attempt to apportion them but will refuse to enforce the provision for liquidated damages.” (P. 344.) On conflicting evidence the trial court in effect found that there was no fault on the part of the school district and that the liquidated damage clause was valid and applicable. If the trial court had found that there was fault on the part of the school district it would not have allowed the school district to retain any liquidated damages. It approved liquidated damages for 107 days.