Weber v. Milpitas County Water District

The specific provision of a contract requiring the contractor to obtain “all necessary permits” must prevail over the conjectural theories of the contractor that the custom of the industry, an “implied condition” of the contract, or an estoppel, casts the duty upon the district of procuring an encroachment permit for the performance of pipe installation work on the highway. Neither can we find any statutory provision that imposes this responsibility upon the district. We are, therefore, constrained to hold that the trial

As we have stated above, the first issue of the case involved the provisions of the contract and the actions of the parties with respect to the procurement of a so-called encroachment permit. On October 13, 1953, Matthew Weber, a general contractor (hereinafter referred to as “the contractor”), entered into an agreement with Mark Thomas & Co., district engineers for the Milpitas County Water District (hereinafter referred to as “the district”), to install a system for the distribution of water in Milpitas County Water District. The contract required the contractor to commence the work within 10 days and complete performance within 120 days of the formation of the contract. Since the major portion of the work involved laying pipe along State Highway 17, the job could not be performed unless an encroachment permit were procured pursuant to the Streets and Highways Code.

The specifications annexed to the contract provided, “The Contractor shall, at his expense, obtain all necessary permits and licenses for the construction of the project, give all necessary notices, pay all fees required by law, and comply with all laws, ordinances, rules and regulations relating to the work and to the preservation of the public health and safety.” (Emphasis added.) Nevertheless, the contractor did not at any time apply for such an encroachment permit. The water district did apply for the permit on July 27, 1953, nearly three months prior to the formation of the contract. The Division of Highways, however, issued the permit to the water district (e/o Mark Thomas Company) as of December 8, 1953, and on December 13, 1953, the contractor was so informed.

Between the date of formation of the contract and the time of the issuance of the permit, the parties engaged in correspondence regarding the permit. The contractor sent two letters to the district, one dated October 30, 1953, which stated that a Mr. Savio of Mark Thomas & Co. had advised the contractor that he could not proceed until a sewer contractor had finished his work, and that the district had not yet obtained the permit. The second letter, dated November 23, 1953, stated that the contractor was unable to commence work

Due to the delay in obtaining the permit the contractor did not complete performance under the contract prior to the onset of winter rains. In order to avoid penalties for delayed performance the contractor requested the district to extend the time for the completion of the contract, and it did so, continuing the period from the original terminal date to July 10, 1954. The wet weather, which intervened, necessitated additional work to prevent interference with the normal flow of traffic.

Moreover, in the laying of the pipe, numerous leaks occurred, requiring additional work on the part of the contractor. He now contends that these leaks resulted from the inadequate size of the pipe used; that the district knew that working pressures would exceed the 150 pound test pressure. Although the contractor contends that the specifications annexed to the contract called for the installation of class 150 asbestos pipe, examination of the specifications discloses as the only provision regarding size of pipe the following paragraph: “2.5—Asbestos-Cement Pipe: The pipe shall be asbestos-cement water pipe in the sizes indicated on the Plans and shall conform to the Tentative Standard Specifications for Asbestos-Cement Pipe, approved as tentative on May 15, 1953, by the American Water Works Association and published as AWWA C400-53T. The Contractor shall furnish at the request of the District Engineers a sworn statement by the manufacturer of said pipe that the requirements of the Standard Specifications hereinabove referred to, have been met.” Perhaps the contractor means to state that the “test pressure” required in the specifications was 150 pounds per square inch, which under such “Tentative Standard Specifications” called for class 150 pipe.

Two engineers testified that this type of pipe sufficed for this project. Although the above mentioned “Tentative Standard Specifications” states that class 150 pipe should be used for maximum working pressures of 150 pounds, the expected pressure here reached 160-165 pounds. The evidence discloses that on some projects the district now uses class 200 pipe, but that it also utilizes class 150 pipe. Moreover, class 150 pipe was installed in another water line constructed at about the same time and subject to the same working pressures as that involved here; yet that line experienced only the normal number of leaks. Some testimony indicates that

Turning to the complaint, we note that it alleges four causes of action. The first two counts refer to the district’s alleged failure to procure an encroachment permit; the third and fourth causes pertain to the district’s alleged improper design of the water system. Thus the contractor alleges in the first count that the contractor and the district entered into a contract which required the district under the laws of California to obtain the permit and that it negligently failed to do so, thereby causing the contractor additional expenses. The second count essentially duplicates the first, with the exception that here the contractor alleges breach of an implied covenant or condition requiring the district to procure an encroachment permit.

The third cause alleges that the district negligently designed the water system in that the specifications annexed to the contract provided for a class of asbestos pipe which proved insufficient to withstand the encountered pressures in the system. The contractor, at an added cost of $10,000, repaired the leaks caused by the district’s claimed negligence. Alleging substantially the same facts as the third cause, the fourth count differs from it only in that here the contractor claims the existence of an implied covenant that the water system had been properly designed and that the district wrongfully breached this covenant.

The trial court found that all of the allegations in the first two causes were correct, but fixed the amount of damage due to the extra work at $4,000 instead of $8,000. The trial court, however, held against the contractor on the third and fourth counts. The district appeals from the judgment as to the first two causes and the contractor appeals from the denial of relief under the third and fourth causes.

We separately analyze each of the salient elements of the case. We initially examine the trial court’s rulings on the first two causes of action, pointing out that we cannot find a sufficient basis to uphold the judgment on those causes. We next examine the findings as to the third and fourth counts, regarding the type of pipe utilized and the issue of the breakage, and conclude that the evidence amply supports the judgment. We finally point out that the resolution of the district’s contention that the statute of limitations bars the first cause becomes unnecessary in view of the foregoing conclusions,

In the face of the contractual provisions that place upon the contractor the obligation of obtaining all permits, we must, in order to sustain the contractor’s position, find some reason for shifting this burden to the district. Yet the contractor proffers no clear theory upon which to base this transposition of obligation; indeed, he does no more than argue the facts of the case in an attempt to prove that they support the result. We have, however, fashioned legal hypotheses of our own in an attempt to support this contractual mutation, but none, to our satisfaction, sustain it.

As we shall explain, the imposition upon the district of the duty of obtaining the permit cannot rest upon an alleged interpretation of the contract in the light of the custom of the industry; the duty is not an “implied condition” of the contract; it cannot stem from any modification of the agreement by the parties; it cannot derive from an estoppel against the district; finally, neither statute nor decision creates it. Even if we did adopt the theory that the district should have obtained the permit, however, the contractor still fails to show how the district was negligent in not sooner procuring it and thus offers no basis for charging the district with liability.

Even assuming the presence of some “custom” of the industry, we are given no definition of its nature. Was it an obligation of the district to procure the permit before letting the contract, as the contractor urged at oral argument ? Was it merely to initiate the proceedings as an accommodation to the contractor so that the contractor would not be required to post a bond, as the district contends ? Or was it an obligation of the district actually to secure the permit? The trial court rendered no findings on this vital issue of the custom of the industry, and, in the absence of them, we cannot fix the alleged custom with any exactitude.

Nor do we find any “implied” covenant or contract imposing upon the district the duty of procuring the permit. The “implied” condition cannot expunge and replace the specific provision; it cannot reverse the clear covenant >of the parties. The contractor suggests no legal basis for such a holding. We see no evidence of any oral modification of the contract; nothing indicates that either before or after the execution of the contract the district orally promised to procure the permit. Indeed the contractor testified that he did not believe “there was any discussion” along the lines of obtaining the permit “prior to the time I signed the contract.” Nor was he ever advised that it was the district’s “responsibility . . . [to] obtain an encroachment permit. ...”

The record does not support any estoppel which

The contractor rests a further argument that the district was bound to get the permit upon division 1, chapter 3, of the Streets and Highways Code, particularly upon sections 660 through 695, and, indeed, the court found “ [t]hat defendant District was required under the laws of the State of California to obtain an encroachment permit from the Division of Highways of the State of California prior to the time that any person acting in its behalf commenced work of any sort in, upon, or over said highway, or any portion of its right-of-way. ’ ’ The code, however, does not place any obligation upon a district, such as that here, as distinguished from a private party, to obtain the permit. Section 675 endows such a body with certain rights in the case of an emergency and section 678 gives it a right to a permit, subject to reasonable conditions, as well as an immunity to the requirement for a bond. But provisions for these expanded rights of the district does not impose upon it an obligation to procure the permit which another party has contracted to obtain.

The decisions, like the statutory provisions, do not establish that the district must perform the obligations which the contractor would place upon it. In this regard the contractor cites only two cases, D. A. Parrish & Sons v. County Sanitation Dist. (1959) 174 Cal.App.2d 406 , 410 [ 344 P.2d 883 ]; McGuire & Hester v. City & County of San Francisco (1952) 113 Cal.App.2d 186 [ 247 P.2d 934 ], and these are not in point. These cases, involving loss caused by a delay by municipal corporations in obtaining easements or rights-of-way to allow

Finally, even if we were to accept the contractor’s contention that the duty to procure the permit rested upon the district, we still could not hold it liable unless its wrongful conduct caused the contractor’s damage. The contractor pleads in his first cause that the district “negligently failed to obtain the . . . permit” and that “said delay was proximately caused by the acts of defendants”; he alleges in his second cause that “As a proximate result of said breach [of the implied condition and convenant of the contract] plaintiff has been damaged. ...” We do not find in the record a showing of proximate causation to sustain a judgment on either count. The contractor does not adduce any proof that the district could have procured the permit at any date earlier than its issuance, or that the contractor himself, if the district had not been at all involved, could have sooner obtained it.

To sustain the contractor’s position we must assume that the district failed to obtain the permit within “a reasonable time”; yet the contractor does not show that the district could have obtained the permit at an earlier date. Certainly the procurement of a permit at the earliest possible date is such procurement within a “reasonable time.” The contractor’s only possible showing on this score rests upon the fact that the district had an opportunity to foresee the delay. The same engineer served both the water district and the sanitation district which contracted with the sewer contractor. To some extent the membership of the two boards apparently overlapped. The district, then, had the opportunity of knowing the permit might be delayed because of the tardy performance of the sewage contractor. Such possible knowledge, and such partial relationship between the two districts, however, does not indicate that the water district could have controlled the sewer contractor or have prevented the delay in the issuance of the encroachment permit.

Having concluded that the contractor cannot recover upon the first two counts, we turn to the third and fourth causes, which seek relief for the contractor’s added expenditures in the correction of the breakage of the pipes. Claiming an alleged inadequacy of the pipe provided in the specifications to withstand the pressures which were to be expected, the contractor contends that the district negligently designed the proposed water system; he alleges likewise that the contract contains an implied covenant that the specified pipe would withstand pressures encountered in the system. Although the trial court found the above allegations untrue, the contractor contends that the evidence does not sufficiently support its findings. As we shall see, substantial evidence supports the conclusion not only that the installed pipe was adequate, but also that the added expense arose from the contractor’s own improper installation.

Turning to evidence as to the sufficiency of the class 150 pipe, we note the testimony of two engineers who stated that the use of class 150 pipe would not be improper under the circumstances. The evidence likewise shows that the district properly obtained from the San Francisco Water Department information regarding pressures to be expected in the system which supported the district’s position. Although the contractor submitted rebuttal testimony as to the sufficiency of the pipe, such evidence merely created a conflict which the trial court resolved. The clear testimony of the engineers that the pipe was not improper served as substantial evidence to sustain the trial court’s finding.

As we have stated above, the record discloses testimony to the effect that the leales in the line may have been due to the contractor’s own conduct in utilizing a type of joint, with which he was not familiar, in connecting each link

Our conclusion that the contractor cannot recover upon the first two causes renders unnecessary any discussion of the argument, urged upon appeal, that the first cause is barred by the statute of limitations.

In summary, the contractor, whose late performance was excused by the district, cannot hold the district liable for added costs incurred by that late performance. If the delay emanated from the tardy appearance of an encroachment permit, the contractor cannot charge the delay to the district when his contract provided that he was to obtain all necessary permits and when he does not show how the district could have sooner obtained it. He cannot, indeed, escape from his own contractual commitment.

We reverse the judgment as to the first and second causes of action and affirm the judgment as to the third and fourth causes of action. Each party shall bear its own costs on appeal.

Bray, P. J., and Sullivan, J., concurred.