Background
cFIRST, LLC provided employee background checks to Service Global, Inc., doing business as Iron Systems, under a 2023 Master Service Agreement governed by California law. The agreement required Iron to pay undisputed invoices and established procedures for disputing invoices. It also warranted that cFIRST’s work would be free from defects for 60 days after completion, plus a 15-day grace period.
Iron failed to pay invoices issued from June 2023 through April 2024, later asserting that cFIRST’s work was defective. The trial court granted cFIRST partial summary judgment for $150,463.88 on invoices that Iron had approved or had not timely disputed. Two April 2024 invoices remained disputed and were excluded from that judgment; cFIRST later dismissed its claim for those invoices and its remaining claims, producing a final appealable judgment.
The Court’s Holding
The First District affirmed. It rejected Iron’s argument that the warranty provision gave Iron 75 days from discovering a defect to withhold payment. The provision instead created a 75-day express-warranty period beginning when the work was completed. Because that period had expired even if measured from cFIRST’s last relevant invoice, the warranty did not excuse Iron’s nonpayment.
The court also held that Iron’s reliance on Mexia v. Rinker Boat Co. was misplaced because that case concerned an implied consumer warranty rather than enforcement of a time-limited express warranty. It declined to consider Iron’s argument about whether required governance meetings occurred because Iron raised that issue at oral argument but not in its appellate brief.
Key Takeaways
- A warranty lasting 60 days plus a 15-day grace period runs from completion of the work, not from the customer’s discovery of an alleged defect.
- A party that approves invoices or fails to dispute them through the contractually required process may not later avoid payment by asserting defective performance.
- The $150,463.88 judgment did not include the two unresolved April 2024 invoices, and cFIRST later dismissed its claim for those invoices.
- An appellate court need not consider an argument first raised during oral argument when it could have been presented in the briefs.
Why It Matters
The decision underscores that courts will enforce negotiated notice, invoice-dispute, and express-warranty deadlines between sophisticated commercial parties. A customer alleging defective services must preserve its contractual remedies by acting within the agreement’s specified periods.
It also illustrates the importance of accurately separating invoices resolved through contractual procedures from invoices that remain disputed: summary judgment was affirmed only as to the former, while the latter were excluded and ultimately dismissed.