Articles Posted in California Courts of Appeal

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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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At issue in this case was whether plaintiff West Coast Air Conditioning Company, Inc. (West Coast) was entitled to recover under a promissory estoppel theory its bid preparation costs in the stipulated amount of $250,000, after it successfully challenged the award of a public works contract by the California Department of Corrections and Rehabilitation (CDCR) to real party in interest Hensel Phelps Construction Co. (HP). The court found HP's bid to update the Ironwood State Prison Heating, Ventilation and Air Conditioning System illegal and nonresponsive as a matter of law. As a result, the court granted West Coast's request for a permanent injunction, preventing HP from performing any additional work on the subject project. HP had only performed about 8 percent of the contract when the injunction issued, and although West Coast ultimately proved it was the lowest responsible bidder when granting the injunction, the court refused to command CDCR to award West Coast the contract for the subject project, despite the court's finding in a previous order that West Coast should have been awarded the contract. The Court of Appeals concluded the trial court properly exercised its authority in awarding West Coast its bid preparation costs of $250,000. The Court rejected CDCR's argument that West Coast, as a matter of law, was not entitled to recover such costs because West Coast's bid allegedly was nonresponsive and because West Coast had obtained a permanent injunction without any additional relief. View "West Coast Air Conditioning Co. v. Cal. Dept. of Corr. & Rehab." on Justia Law

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Area 51 used Alameda city property for events it planned for third-party companies. PM assisted the city with managing the license arrangements. Due to problems connected with Area 51 events, the city ceased doing business with it. Area 51 had committed to third-party entities based on PM’s previous confirmation of the city’s willingness to license space. Area 51 sued. Defendants (city, PM, and individuals) filed a demurrer and a motion to strike under Code of Civil Procedure section 425.16, the anti-SLAPP (strategic lawsuit against public participation) statute. The court denied that motion and granted the demurrer. The court of appeal reversed in part. While the thrust of the claims against the city is breach of contract, the individual defendants were not contracting parties; the sole basis for asserting liability against them is what they did on behalf of the city. That conduct is expressive in nature (emails confirming dates, and announcing termination of the leasing relationship), which qualify as “written or oral statement[s] . . . made in connection with an issue under consideration . . . by a[n] . . . executive . . . body,” under the anti-SLAPP law. Area 51 could not show a probability of prevailing on the merits. The case was remanded for consideration of an award of attorneys’ fees and costs. View "Area 51 Productions, Inc. v. City of Alameda" on Justia Law

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In this redevelopment case, the city of Anaheim, acting in its capacity as successor to the former Anaheim Redevelopment Agency, sought approval from the California Department of Finance (the department) to obtain money from the Redevelopment Property Tax Trust Fund (the fund or, the RPTTF) to pay back the city of Anaheim for payments the City of Anaheim made to a construction company to complete certain real property improvements that the former Anaheim Redevelopment Agency was obligated to provide on a particular redevelopment project (the packing district project). The city and the city-as-successor characterized the transaction between themselves as a loan, but the department ultimately denied the claim for money from the fund because the city did not disburse the loan proceeds to the city-as-successor, but instead paid the construction company directly, and because the city-as-successor did not obtain prior approval for the “loan” agreement with the city from the oversight board. Around the same time, the city-as-successor sought approval from the department to obtain money from the fund to make payments to the Anaheim Housing Authority (the authority) under a cooperation agreement between the agency and the authority, the purpose of which was to provide funding for the Avon/Dakota revitalization project, which was being carried out by a private developer -- The Related Companies of California, LLC (Related) -- pursuant to a contract with the authority. The department denied that claim because the 2011 law that dissolved the former redevelopment agencies rendered agreements between a former redevelopment agency and the city that created that agency (or, a closely affiliated entity like the authority) unenforceable. The city, the city-as-successor, and the authority sought mandamus, declaratory, and injunctive relief on both issues in the superior court, but the trial court denied the writ petition and dismissed the complaint for declaratory and injunctive relief. The Court of Appeal reversed, finding: (1) with respect to the packing district project, the fact that the city contracted directly with the construction company to construct the improvements the agency was legally obligated to provide at that project, and the fact that the city paid the company directly for its work, did not mean the agreement between the city and the city-as-successor with respect to the transaction was not a loan, as the department and the trial court concluded, also, the fact that the city-as-successor did not obtain prior approval from the oversight board to enter into a loan agreement with the city did not give the department a valid reason to deny the city as successor’s request for money from the fund to pay off the loan; and (2) as for the money from the fund claimed for the Avon/Dakota revitalization project, enforcing the provision of the dissolution law that renders unenforceable an agreement between a former redevelopment agency and the city that created it (or an affiliated entity like the authority) would, in this case, unconstitutionally impair Related’s contractual rights under its agreement with the authority. View "City of Anaheim v. Cohen" on Justia Law

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California-American, a water utility, and Marina and Monterey, public water agencies, entered into contracts to collaborate on a water desalination project, stating that the prevailing party of “any action or proceeding in any way arising from [their a]greement” would be entitled to an award of attorney fees and costs. After learning that a member of Monterey’s board of directors had a conflict of interest, having been paid for consulting work to advocate on behalf of Marina, California-American sued to have the contracts declared void under Government Code section 1090. Monterey agreed that the contracts were void. Marina filed cross-claims seeking a declaration that the contracts were “valid and enforceable.” Years of litigation culminated in a holding declaring the agreements void. Marina challenged post-judgment orders that California-American and Monterey were entitled to costs as prevailing parties under Code of Civil Procedure sections 1032 and 1717 and granting them specific attorney fees awards. The court of appeal affirmed, rejecting Marina’s argument that they were not entitled to awards because the underlying contracts were declared void. The illegality exception to the rule of mutuality of remedies applies when the contract's subject matter is illegal but does not apply when the litigation involves the “invalidity” or “unenforceability” of an otherwise legal contract. View "California-American Water Co. v. Marina Coast Water District" on Justia Law

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In a case arising out of the “Great Dissolution” of redevelopment agencies (RDAs) in California the City of Grass Valley (City) appealed a judgment denying in part its petition for writ of mandate. The City, which was also the successor agency for its former RDA, sought to compel the Department of Finance (Department) to recognize the enforceability of certain agreements involving that RDA. The Department cross-appealed a part of the judgment commanding it to consider whether certain expenditures fell under a “goods and services” provision, claiming the City’s failure to raise this issue in an administrative forum precludes the relief granted by the trial court. The Court of Appeal agreed with the Department on that point and reversed with directions to recall the writ granting the City partial relief. However, based on the retrospective application of postjudgment legislation, the Court directed the trial court to issue a new writ commanding the Department to consider the City’s claim regarding a highway project agreement. The Court otherwise affirmed the judgment. View "City of Grass Valley v. Cohen" on Justia Law