Justia California Court of Appeals Opinion Summaries

Education Code section 17406 authorizes school districts to use lease-leaseback agreements for construction or improvement of school facilities: the school district leases its own real property to a contractor for a nominal amount, and the contractor agrees to construct or improve school facilities on the property and lease the property and improvements back to the district. At the end of the lease-leaseback agreement, title to the project vests in the school district. California Taxpayers Network brought a reverse validation action (Code Civ. Proc. 863), challenging a lease-leaseback agreement between Mount Diablo School District and Taber Construction, alleging that the Education Code requires “genuine lease-leaseback agreements,” which “provide for financing of the school facility project over time,” but defendants’ lease-leaseback contracts were “sham leases”; that the contracts were illegal because a public bidding process is required for school construction projects; and that Taber provided professional preconstruction services to the District regarding the project before entering the lease-leaseback contracts. The court of appeals affirmed dismissal of claims "that attempt to engraft requirements on the transaction" that are not part of the Education Code. The court reversed in part, holding that the plaintiff did state a conflict of interest claim against Taber sufficient to withstand a demurrer. View "California Taxpayers Action Network v. Taber Construction, Inc." on Justia Law

Kase was exposed to asbestos insulation used on nuclear submarines during the early 1970s. The trial court rejected claims against a broker that arranged for asbestos-containing insulation to be shipped to the Mare Island Naval Shipyard, where workers packed it around the submarine piping it protected. The court held, on summary judgment, that the Navy‘s procurement of asbestos insulation for its nuclear submarines implicated the government contractor defense set forth in the Supreme Court’s 1988 holding, Boyle v. United Technologies Corp. The broker procured the insulation pursuant to and in compliance with relatively detailed performance and testing specifications, although those specifications did not expressly call out for asbestos in the insulation. According to undisputed evidence, the specifications could only be met by asbestos-containing insulation, and the only product on the Navy‘s approved list of suitable products was the product at issue, Unibestos. The court of appeal affirmed, stating that the defense does not necessarily exclude the procurement of products also sold commercially. The Navy‘s procurement of the asbestos insulation at issue occurred after years of evaluating and weighing the utility of and the health hazards associated with asbestos products and pursuant to specifications that required an asbestos product. View "Kase v. Metalclad Insulation Corp." on Justia Law

To address Monterey County’s water needs, two public agencies and a water company entered into five interrelated agreements, in 2010-2011, to collaborate on a water desalination project. After it was revealed that a board member of one of the public agencies had a potential conflict of interest, the water company took the position that the agreements were void under Government Code section 1090. That board member was eventually convicted under a statute that prohibits “financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.” In an action for declaratory relief, the trial court agreed that four of the five agreements were void. The court of appeal affirmed, rejecting an argument that the challenges were time barred and that the trial court lacked jurisdiction to consider the parties’ dispute. A public agency is not bound by the 60-day limitation period that governs validation actions when it seeks a judicial determination of the validity of a contract under section 1090. View "Cal.-Am. Water Co. v. Marina Coast Water Dist." on Justia Law

Plaintiff Sweetwater Union High School District filed this action against defendants Gilbane Building Company, The Seville Group, Inc. (SGI), and Gilbane/SGI, a joint venture (the Joint Venture), seeking to void management contracts with all three entities, and to require that they disgorge all sums that Sweetwater paid them under the contracts. Sweetwater alleges that certain representatives of the defendant entities engaged in a "pay to play" scheme with several Sweetwater officials that involved paying for expensive dinners, tickets to entertainment and sporting events, and travel expenses, and making contributions to political campaigns and charities, in an effort to influence the officials to award defendants certain construction contracts. Gilbane and the Joint Venture brought a special motion to strike (or "anti-SLAPP motion"). The trial court denied the motion on the ground that the conduct underlying the complaint was illegal as a matter of law, and therefore, was not protected by the constitutional guarantees of free speech and petition. Defendants argued on appeal that the trial court erred in denying their anti-SLAPP motion. After review, the Court of Appeal concluded that the trial court did not abuse its discretion in considering the evidence proffered by Sweetwater, including signed plea forms and transcripts from grand jury testimony in criminal cases against many of the individuals involved in the alleged "pay to play" contracting scheme. "Such evidence is, in all material respects, indistinguishable from evidence presented by way of a declaration. Based on the proffered evidence, we conclude that Sweetwater has sufficiently demonstrated a probability of prevailing on the merits. We therefore affirm the trial court's denial of defendants' anti-SLAPP motion." View "Sweetwater Union School Dist. v. Gilbane Building Co." on Justia Law

A trade association of California unions, contractors’ associations and contractors filed suit. Following discovery and a contested hearing, the court ruled that defendant Ross Valley Sanitary District lacked authority under Public Contract Code 20803 to engage its own workforce to complete a sewer system improvement project costing more than $15,000 without putting the project out for competitive bid and contract. The trial court ordered the District to cease and desist from taking further action with respect to about 139 miles of its small diameter sewer pipe with in-house workers, and to conduct all future replacement of this pipe through competitive bid and contract. The court of appeal reversed. Section 20803 applies when a district contracts with a third party for public work, and not when a district relies on force account (in-house) work. View "Constr. Indus. Force Acct. Council, Inc. v. Ross Valley Sanitation Dist." on Justia Law

The Army Corps of Engineers retained JMR as general contractor for construction of a dental clinic at the Presidio of Monterey. JMR entered into separate electrical and plumbing subcontracts with EAR. SureTec issued separate bonds guaranteeing EAR’s performance. While the project was ongoing, JMR communicated with EAR about alleged delays, deficient and late submittals, and improper work, and retained certain funds otherwise due EAR. After the project was completed, JMR sued EAR and SureTec for breach of contract and for foreclosure of the bonds. EAR filed a cross-complaint to recover retention funds withheld under the subcontracts. JMR was awarded $315,631, which included an offset for retention funds. The court held that JMR was entitled to attorney fees for its successful defense of the cross-complaint; awarded JMR $90,644.07 in expert witness fees, concluding that JMR’s recovery exceeded its $375,000 pretrial settlement offers. The court of appeal affirmed the judgment but reversed the award of expert fees. The court upheld utilization of the Eichleay method to calculate extended home office overhead damages; use of the modified total cost method of calculating JMR’s disruption and delay damages; and finding SureTec liable under the bonds because formal notice of default was not a condition precedent to recovery. View "JMR Constr. Corp. v. Envtl Assessment & Remediation Mgmt., Inc." on Justia Law

The California Department of Transportation (CalTrans) and Papich Construction Company, Inc. appealed a trial court’s issuance of a writ of mandate to vacate the award of a public works contract to Papich. DeSilva Gates Construction submitted the second-lowest bid (the first bidder was disqualified for a non-responsive bid), and included the names and description of work by all subcontractors slated to perform work exceeding one-half of one percent of the bid amount. DeSilva later sent a letter to CalTrans noting DeSilva had inadvertently supplied CalTrans with additional information on the subcontractor list "above and beyond what was required." DeSilva explained it had not listed "All Steel Fence" as a subcontractor in its bid because the value of the bid items it would perform was less than one-half of one percent of the bid and the information for All Steel Fence (submitted within 24 hours of the bid) was additional information that was not required. Papich challenged DeSilva’s bid as having changed the subcontractor list. CalTrans rejected DeSilva’s bid as nonresponsive. DeSilva protested CalTrans’s determination that its bid was nonresponsive and protested Papich’s bid. The trial court granted the writ on grounds CalTrans erroneously rejected DeSilva's bid, and erred by awarding the contract to Papich despite Papich’s failure to comply with a material requirement of the information for bids. On appeal, CalTrans and Papich argued DeSilva’s bid was nonresponsive. Appellants also argued CalTrans had discretion to waive Papich’s mistake in failing to acknowledge the addendum to the information for bids. After review, the Court of Appeal concluded the trial court did not err. DeSilva’s disclosure of a subcontractor performing work amounting to only one-tenth of one percent of the total value of the contract was not required by the Public Contract Code or CalTrans’s information for bids. The additional information was accurate, albeit unnecessary, and did not render DeSilva’s bid nonresponsive. By contrast, CalTrans initially declared Papich’s bid to be nonresponsive and then waived Papich’s mistake and determined the bid to be responsive. The Court concluded CalTrans abused its discretion by awarding Papich the contract. Accordingly, the Court affirmed the trial court’s issuance of the writ of mandate. View "DeSilva Gates Construction, LP v. Dept. of Transportation" on Justia Law

In this case, San Diegans for Open Government (SanDOG) filed a Government Code section 1090 taxpayers' action on behalf of the Sweetwater Union High School District seeking to recover contract payments made to three building contractors, including appellant Har Construction, Inc. SanDOG alleged the District superintendent and several District board members were "financially interested" in the public works contracts and thus the contracts were void. About 16 months after SanDOG filed its first amended complaint, Har Construction moved to dismiss the complaint under the anti-SLAPP statute. The court denied the motion because it found SanDOG met its burden to show a probability of prevailing. Har Construction appealed the anti-SLAPP denial order. The Court of Appeal affirmed, but on different grounds. The Court determined Har Construction's motion was untimely and the anti-SLAPP statute was inapplicable because SanDOG's claims fell within the statute's public interest exemption. The Court did not reach the issue whether SanDOG's claims arose out of protected activity and, if so, whether SanDOG met its burden to show a probability of prevailing. View "San Diegans etc. v. Har Construction" on Justia Law

The trial court found that a general contractor, Jeff Tracy, Inc., doing business as Land Forms Construction, did not have a valid license while performing work on a project for City of Pico Rivera. Therefore, the court ordered Land Forms to disgorge all compensation paid to it by the City. Land Forms appealed, contending that the trial court improperly denied it a jury trial. The court concluded that Land Forms was entitled to a jury trial on these issues, and therefore reversed the judgment. However, the court found that Land Forms is not entitled to any apportionment where Business and Professions Code section 7031, subdivision (b) does not allow apportionment as a matter of law. Accordingly, the court reversed the trial court's judgment. View "Jeff Tracy, Inc. v. City of Pico Rivera" on Justia Law

Relators filed suit under the California False Claims Act, Gov. Code, 12650 et seq., alleging that DHL overcharged and fraudulently billed the State for delivery services. The trial court concluded that the action was preempted by the Airline Deregulation Act of 1978, 49 U.S.C. 41713(b)(1), and Federal Aviation Administration Authorization Act of 1994, 49 U.S.C. 14501(c)(1). The trial court then granted judgment on the pleadings. After remand from the California Supreme Court, the court concluded that People ex rel. Harris v. PAC Anchor Transportation, Inc. does not apply in this case. The court held, as it had before, that the application of the State Act in this case would constitute an impermissible regulation of DHL’s prices, routes and services in conflict with federal law. Accordingly, the court affirmed the trial court's order. View "Grupp v. DHL Express" on Justia Law