Justia Government Contracts Opinion SummariesArticles Posted in Construction Law
Alaska, Dept. of Transportation & Public Facilities v. Osborne Construction Co.
In August 2013 the Alaska Department of Transportation and Public Facilities (DOT) entered into a contract with Osborne Construction Company to upgrade the Aircraft Rescue and Fire Fighting building at the Fairbanks International Airport to withstand damage in the event of an earthquake. The DOT appealed a superior court decision reversing the agency's decision in an administrative appeal. The agency denied a contractor’s claim for additional compensation because the claim was filed outside the filing period allowed by the contract. After applying its independent judgment to interpret the contract, the Alaska Supreme Court agreed with the DOT that the contractor failed to file its claim within the period allowed. The Supreme Court therefore reversed the superior court’s decision and reinstated the agency’s. View "Alaska, Dept. of Transportation & Public Facilities v. Osborne Construction Co." on Justia Law
San Antonio River Authority v. Austin Bridge & Road, L.P.
In this construction contract dispute, the Supreme Court held that the San Antonio River Authority possessed the authority to agree to arbitrate claims under Texas Local Government Code Chapter 271 and exercised that authority in the contract and that the judiciary, rather than an arbitrator, retains the duty to decide whether a local government has waived its governmental immunity.The River Authority hired Austin Bridge and Road L.P. for a construction project. The parties agreed to submit any disputes about the contract to arbitration. Austin Bridge invoked the contract's arbitration provisions when disagreements about the scope of work and payment arose. After the arbitrator denied the River Authority's plea of governmental immunity, the River Authority sued Austin Bridge, arguing that it lacked the authority to agree to the contract's arbitration provisions. The trial court concluded that the arbitration provisions in the contract were enforceable. The court of appeals agreed that the River Authority had the authority to agree to arbitrate but concluded that a court, rather than an arbitrator, must decide whether the River Authority was immune from the claims against it. The Supreme Court affirmed, holding that chapter 271 waived the River Authority's immunity from suit for Austin Bridge's breach of contract claim. View "San Antonio River Authority v. Austin Bridge & Road, L.P." on Justia Law
Crosno Construction, Inc. v. Travelers Casualty etc.
North Edwards Water District (the District) selected Clark Bros., Inc. (Clark) as its general or direct contractor on a public works project to build an arsenic removal water treatment plant. Clark hired subcontractor Crosno Construction (Crosno) to build and coat two steel reservoir tanks. The subcontract contained a "pay-when-paid" provision that stated Clark would pay Crosno within a reasonable time of receiving payments from the District, but that this reasonable time "in no event shall be less than the time Contractor and Subcontractor require to pursue to conclusion their legal remedies against Owner or other responsible party to obtain payment . . . ." After Crosno completed most of its work, a dispute arose between the District and Clark halting the project. As Clark sued the District, Crosno sought to recover payments owed under the public works payment bond that Clark had obtained for the project. The issue this case presented for the Court of Appeal's review involved Crosno's claim against the bond surety, Travelers Casualty and Surety Company of America (Travelers). At issue was whether the pay-when-paid provision in Crosno's subcontract precluded Crosno from recovering under the payment bond while Clark's lawsuit against the District was pending. Relying on Wm. R. Clarke Corp. v. Safeco Ins. Co., 15 Cal.4th 882 (1997), the trial court found the pay-when-paid provision here unenforceable because it affected or impaired Crosno's payment bond rights in violation of Civil Code section 8122. With the facts largely undisputed, the court granted Crosno's motion for summary judgment and entered judgment in its favor for principal due plus prejudgment interest. Travelers argued the trial court misconstrued Wm. R. Clarke and erred in failing to enforce the pay-when-paid provision against the bond claim. After carefully considering the parties' arguments, the Court of Appeal agreed with the trial court's analysis and affirmed. View "Crosno Construction, Inc. v. Travelers Casualty etc." on Justia Law
Restore Construction Co., Inc. v. Board of Education of Proviso Township High Schools District 209
Restore was asked to mitigate and repair significant fire damage at Proviso East High School, having provided similar service to the District in the past. The District’s customary practice when contracting for repair and payment of losses covered by insurance was to proceed without a recorded vote of its Board. The fire loss was covered by insurance. The District’s superintendent executed contracts with Restore.The District was subject to the School District Financial Oversight Panel (FOP) and Emergency Financial Assistance Law (105 ILCS 5/1B-1) and the Financial Oversight Panel Law (105 ILCS 5/1H-1). The FOP’s chief fiscal officer attended construction meetings and approved numerous subcontracts, quotations, bids, sales orders, change orders, and invoices. Although there was no recorded vote, “a majority of the Proviso Board knew and informally approved" the work. Restore was paid by the insurers for all but $1,428,000. Restore sued, seeking recovery from the District based on quantum meruit. The District argued that it had no obligation to pay because the contracts had not been let out for bid and approved by a majority vote as required by the School Code (105 ILCS 5/1-1).The Illinois Supreme Court affirmed the reinstatement of the case following dismissal. The failure of a governmental unit to comply with required contracting methods is not fatal to a plaintiff’s right to recover based on quasi-contract or implied contract principles. The Board was subject to the FOP; the FOP was fully apprised of and approved the work. Any misconduct was on the part of the Board; allowing Restore to recover presents no “risk of a raid on the public treasury.” View "Restore Construction Co., Inc. v. Board of Education of Proviso Township High Schools District 209" on Justia Law
McDonald v. Fidelity & Deposit Co. of Maryland
The Supreme Court reversed the decision of the district court granting summary judgment in favor of Plaintiffs in this action seeking to recover delinquent contributions to various trust funds for construction on a state construction project, holding that the right of action under a payment bond statute extends to any amount due an employee, meaning any amount that is traceable specifically to an employee.One of the subcontractors hired to work on the project failed to make contributions to various trust funds for its employees' work on the project, as required by trust agreements and a collective bargaining agreement. The trusts (Plaintiffs) sought to recover the delinquent contributions from the public payment bond associated with the project by suing Defendant, the surety for the payment bond. The district court granted summary judgment for Plaintiffs. On appeal, the parties disputed whether Utah Code 63G-6-505(4) limits the right of action on a payment bond to amounts due to an employee or encompasses claims for any amounts due for an employee or on the employee's behalf. The Supreme Court reversed, holding that the right of action under the public payment bond statute contemplates recovery of any specific benefit that is due a person in the sense of being traceable to that person. View "McDonald v. Fidelity & Deposit Co. of Maryland" on Justia Law
Hensel Phelps Construction Co. v. Department of Corrections and Rehabilitation
After Phelps was awarded a public works contract by the CDCR, another bidder successfully challenged the award, obtaining a ruling in a San Diego trial court that Phelps's bid was "non-responsive as a matter of law" due to its inclusion of "non-waivable mathematical/typographical errors." Phelps then filed suit against CDCR, seeking to recover the costs it expended on the project. The trial court held that the San Diego trial court's ruling was itself the result of a defect in the competitive bidding process caused solely by CDCR, and entered judgment in favor of Phelps.The Court of Appeal reversed, holding that judgment on the pleadings should have been granted. The court held that the language in Public Contract Code section 5110 provides that the parties to a challenged public contract may enter into that contract pending final resolution of the challenge, but if the challenge is resolved by invalidation because the public entity was at fault, the contractor may recover. Applying section 5110 in this case, the court held that the contract was invalidated for a material error in Phelps's bid, not for any defect in the competitive bidding process, much less a defect caused solely by CDCR. Therefore, section 5110 could not provide a basis for recovery. The court held that application of the doctrine of collateral estoppel would produce the same result, and rejected Phelps's late-raised alternative ground. However, the court affirmed the trial court's denial of recovery on CDCR's cross-complaint for disgorgement. View "Hensel Phelps Construction Co. v. Department of Corrections and Rehabilitation" on Justia Law
California Taxpayers Action Network v. Taber Construction, Inc.
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
A.J. Fistes Corp. v. GDL Best Contractors, Inc.
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
Synergy Project Management, Inc. v. City and County of San Francisco
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
Premier Office Complex of Parma, LLC v. United States
In 2007, the VA sought to lease space for a Parma, Ohio VA clinic. A pre-solicitation memorandum stated that the building must comply with the Interagency Security Committee (ISC) Security Design Criteria. The subsequent Solicitation discussed the physical security requirements. Premier submitted a proposed design narrative that did not address those requirements. In 2008, Premier and the VA entered into a Lease. Premier was to provide a built-out space as described in the Solicitation. About 18 months later, the VA inquired about Premier’s first design submittal, advising Premier to obtain access to the ISC standards, because “the project needs to be designed according to the ISC.” The ISC denied Premier’s request, stating that the documents had to be requested by a federal contracting officer who has a “need to know.” The VA forwarded copies of three ISC documents. Some confusion ensued as to which standard applied. The VA then instructed Premier to disregard the ISC requirements and to incorporate the requirements from the latest VA Physical Security Guide. Months later, the VA changed position, stating that “[t]he ISC is the design standard.” Premier’s understanding was that only individual spaces listed in a Physical Security Table needed to comply with the ISC. The VA responded that the entire building must conform to the ISC at no additional cost. Premier constructed the building in accordance with the ISC standards then unsuccessfully requested $964,356.40 for additional costs. The Federal Circuit affirmed summary judgment in favor of the government. The contract unambiguously requires a facility conforming to ISC security requirements. View "Premier Office Complex of Parma, LLC v. United States" on Justia Law