Justia California Court of Appeals Opinion Summaries

Articles Posted in Government Contracts
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After Mount Diablo School District hired Taber to modernize eight school campuses, the plaintiffs challenged the District’s use of a lease-leaseback agreement for the construction project. The court of appeal affirmed the dismissal of most of plaintiff’s claims, except a claim against Taber of conflict of interest. Plaintiff alleged Taber provided preconstruction services regarding the project, so a conflict of interest arose when the District subsequently awarded Taber the contract. The court of appeal affirmed summary judgment in Taber’s favor, finding no violation of Government Code section 1090(a). Section 1090 only prohibits a contract made by a financially-interested party when that party makes the contract in an “official capacity.” Where the financially-interested party is an independent contractor, section 1090 applies only if the independent contractor can be said to have been entrusted with “transact[ing] on behalf of the Government.” In this case, it cannot reasonably be said that Taber was hired to engage in or advise on public contracting on behalf of the District. The District contracted with Taber for Taber to provide preconstruction services in anticipation of Taber completing the project. Taber provided those services (planning and setting specifications) in its capacity as the intended provider of services, not as a de facto official of the District. View "California Taxpayers Action Network v. Taber Construction, Inc." on Justia Law

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This appeal involved an effort to "foist" the pension and retiree healthcare costs for city employees who performed redevelopment-related work onto the successor agency to the now-abolished Anaheim Redevelopment Agency (Anaheim RDA). Plaintiff City of Anaheim, in its own right and as the successor agency to the Anaheim RDA, and John Woodhead, who worked for both entities, brought this 2017 petition for a writ of mandate. The petition sought to overturn the determination that an agreement between the City of Anaheim and the Anaheim RDA to reimburse the City of Anaheim for the retirement costs of its employees who worked for the Anaheim RDA was not an enforceable obligation of the Anaheim RDA, and thus payments to the City of Anaheim for this purpose from the successor agency were not permissible. As defendants, the petition identified the director of the Department of Finance, Keely Bosler, in her official capacity; the Department of Finance (a redundant defendant); the auditor-controller for Orange County (a neutral stakeholder); and the oversight board that supervised the operations of the successor agency. The trial court entered judgment in favor of the Department, "after issuing a lengthy and cogent ruling." On appeal, petitioners reiterated their claims, which focused on their interpretation of what was a “legally enforceable” required payment from the Anaheim RDA, the purported unconstitutional impairment of contractual rights, and estoppel. Finding no reversible error, the Court of Appeal affirmed. View "City of Anaheim v. Bosler" on Justia Law

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Ron Koenig was the superintendent and principal of the Warner Unified School District (the district). He and the district entered an agreement to terminate his employment one year before his employment agreement was due to expire. Under the termination agreement, Koenig agreed to release any potential claims against the district in exchange for a lump sum payment equivalent to the amount due during the balance of the term of his employment agreement, consistent with Government Code section 53260. The district also agreed to continue to pay health benefits for Koenig and his spouse "until Koenig reaches age 65 or until Medicare or similar government provided insurance coverage takes effect, whichever occurs first." The district stopped paying Koenig's health benefits 22 months later. Koenig then sued to rescind the termination agreement and sought declaratory relief he was entitled to continued benefits pursuant to his underlying employment agreement, which provided that Koenig and his spouse would continue receiving health benefits, even after the term of the agreement expired. After a bench trial, the trial court determined the district's promise in the termination agreement to pay health benefits until Koenig turned 65 violated section 53261, was unenforceable, and rendered the termination agreement void for lack of consideration. Both Koenig and the district appealed the judgment entered after trial. Koenig contended the trial court properly determined the termination agreement was void but should have concluded he was entitled to continued health benefits until the age of 65. The district contended the trial court erred when it concluded the termination agreement was void; rather, the trial court should have severed the termination agreement's unenforceable promise to continue paying benefits, enforced the remainder of the termination agreement, and required Koenig to pay restitution for benefits paid beyond the term of the original agreement. The Court of Appeal concluded the termination agreement's unlawful promise to pay health benefits in excess of the statutory maximum should have been severed to comply with sections 53260 and 53261, Koenig did not establish he was entitled to rescind the termination agreement, and the district was entitled to restitution for health benefits paid beyond the statutory maximum. Judgment was reversed and the trial court directed to enter judgment in favor of the district for $16,607. View "Koenig v. Warner Unified School District" on Justia Law

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Fistes appealed from the trial court's judgment sustaining without leave to amend defendants' demurrer to Fistes' third amended complaint, seeking a declaration that the contract the District awarded to GDL for the remediation of school properties was void due to violations of the Public Contract Code and the Government Code. The Court of Appeal held that Fistes alleged facts sufficient to establish standing under Code of Civil Procedure section 526a based on its payment of state taxes that fund the District. The court also held that the district court erred in sustaining the demurrer based on uncertainty without leave to amend. In this case, although Fistes has not adequately alleged a cause of action against the Lopezes, it has made a sufficient showing for leave to amend. Accordingly, the court reversed and remanded for further proceedings. View "A.J. Fistes Corp. v. GDL Best Contractors, Inc." on Justia Law

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The Subletting and Subcontracting Fair Practices Act governs public works projects, requires a prime contractor to obtain the awarding authority's consent before replacing a subcontractor listed in the original bid (Pub. Contract Code 4107(a)), and limits the awarding authority’s ability to consent. If the original subcontractor objects to being replaced, the awarding authority must hold a hearing. San Francisco entered a contract with prime contractor Ghilotti for a major renovation of Haight Street. Consistent with its accepted bid, Ghilotti entered a contract with subcontractor Synergy for excavation and utilities work. After Synergy broke five gas lines and engaged in other unsafe behavior, the city invoked a provision of its contract with Ghilotti to direct Ghilotti to remove Synergy and substitute a new subcontractor. Under protest, Ghilotti terminated Synergy and identified two potential replacement contractors. Synergy objected. A hearing officer determined that Synergy’s poor performance established a statutory ground for substitution. Synergy and Ghilotti argued that the hearing officer lacked jurisdiction because Ghilotti had not made a “request” for substitution. The trial court agreed. The court of appeal reversed. Although the statute contemplates that the prime contractor will normally be the party to seek substitution, the procedure followed here “complied in substance with every reasonable objective of the statute.” View "Synergy Project Management, Inc. v. City and County of San Francisco" on Justia Law

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The Orange County Water District (the District) appealed a postjudgment order awarding The Arnold Engineering Company approximately $615,000 in costs of proof under Code of Civil Procedure section 2033.420 based on the District's failure to admit certain fact-specific requests for admission (RFAs) during discovery. The District argued the trial court erred in making the award because: (1) the District had reasonable grounds to believe it would prevail on the matters at issue under section 2033.420 (b)(3); and (2) even if it did not, Arnold did not adequately substantiate its costs with admissible evidence. After review, the Court of Appeal concluded the trial court abused its discretion in awarding costs for certain RFAs because the District reasonably relied on percipient witness testimony, undisputed scientific testing, and the opinions of a qualified expert in denying the RFAs. Furthermore, the Court determined certain evidence, namely expert witness invoices, was inadequate to support an award under the circumstances here because it did not distinguish between recoverable and nonrecoverable costs. The case was remanded for a new order awarding reasonable costs of proof. View "Orange County Water Dist. v. The Arnold Engineering Co." on Justia Law

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JRI contracted with the City of Los Angeles Department of Airports (LAWA), to provide LAWA specialized airport firefighting trucks. Each sued the other for breach of the contract. LAWA further alleged JRI violated the California False Claims Act (CFCA), Government Code section 12650, asserting that when JRI submitted it[s] invoices for progress payments and final payments, JRI knew that it was not in compliance with the contract and sought to defraud the government entity LAWA into making payments and that JRI fraudulently induced LAWA to enter into the contract. LAWA was awarded $1 in contract damages. LAWA’s CFCA claim was rejected by the jury, as were JRI’s claims against LAWA. The court awarded LAWA costs as a prevailing party on the contract claims but awarded JRI attorney fees on the CFCA claim, finding the claim frivolous and harassing. The court of appeal affirmed JRI “prevail[ed] in the action” under the relevant CFCA fee provision (section 12652(g)(9)(B);) regardless of its failure to prevail in the action as a whole. View "John Russo Industrial Sheetmetal, Inc. v. City of Los Angeles Department of Airports" on Justia Law

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The San Lorenzo Valley Water District acquired real property in Boulder Creek, California from the Dildines. Holloway, a taxpayer within District, filed suit claiming the contract was void under Government Code section 1090, because one of District’s directors, Vierra, had an interest in the contract by nature of his partial ownership in Showcase Realty, which facilitated the property sale, and the fact that his wife was the listing agent for the property. The trial court dismissed on the ground that Holloway lacked standing to assert a claim for conflict of interest. The court of appeal reversed. Holloway has taxpayer standing under Code of Civil Procedure section 526a to challenge the contract and has standing under Government Code section 1092 to bring an action for conflict of interest. There is no challenge to District’s bonds, warrants or other evidence of indebtedness; Holloway was not required to bring a validation action under Water Code section 30066. View "Holloway v. Showcase Realty Agents, Inc." on Justia Law

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Dillard was the executive director of ACAP, an agency created by Alameda County and several cities. Daniels was the grants manager. The two married. The Agency was awarded a $500,000 Department of Health and Human Services AFI grant to fund programs for low-income people, who deposit money in an individual bank account, matched with federal AFI grant funds and equal nonfederal funds, which can be withdrawn for higher education, starting a business, or buying a house. Dillard and Daniels were charged with: Count I, conspiracy to commit grand theft by false pretenses in a letter to HHS “falsely attesting” that ACAP had more than $426,000 in non-federal match funds. Count 2: Grand theft by false pretenses by unlawfully taking grant funds exceeding $200,000. Count 3: Making a false account of public money. Count 4: Using public money for a purpose not authorized by law to fund Agency payroll and other expenses. Count 5: Dillard was charged with instructing employees to work on her residence at below-market rates and obtaining reimbursement for improper business expenses. Count 6: Preparing false documentary evidence regarding the residency status of Agency clients and a seminar agenda. They were convicted on Counts 2, 3, and 6. The court of appeal affirmed the Count 6 convictions but found the other convictions preempted by federal law. View "People v. Dillard" on Justia Law

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Dillard was the executive director of ACAP, an agency created by Alameda County and several cities. Daniels was the grants manager. The two married. The Agency was awarded a $500,000 Department of Health and Human Services AFI grant to fund programs for low-income people, who deposit money in an individual bank account, matched with federal AFI grant funds and equal nonfederal funds, which can be withdrawn for higher education, starting a business, or buying a house. Dillard and Daniels were charged with: Count I, conspiracy to commit grand theft by false pretenses in a letter to HHS “falsely attesting” that ACAP had more than $426,000 in non-federal match funds. Count 2: Grand theft by false pretenses by unlawfully taking grant funds exceeding $200,000. Count 3: Making a false account of public money. Count 4: Using public money for a purpose not authorized by law to fund Agency payroll and other expenses. Count 5: Dillard was charged with instructing employees to work on her residence at below-market rates and obtaining reimbursement for improper business expenses. Count 6: Preparing false documentary evidence regarding the residency status of Agency clients and a seminar agenda. They were convicted on Counts 2, 3, and 6. The court of appeal affirmed the Count 6 convictions but found the other convictions preempted by federal law. View "People v. Dillard" on Justia Law