LOS ANGELES – A state appeals panel has determined a dispute between a contractor and the California Department of Corrections and Rehabilitation was improperly resolved during a bench trial.
Hensel Phelps Construction sued the CDCR after a San Diego trial court ruled Phelps’ bid on an $88 million contract for heating, ventilating and air conditioning at Ironwood State Prison was invalid on account of mathematical and typographical errors. In its suit, Phelps argued it should recover costs extended on the project under a statute that allows such relief when the public entity is the sole cause of a defect in the bidding process.
CDCR sought judgment, saying Phelps couldn’t recover anything because the San Diego court ruled Phelps’ bid was nonresponsive. Los Angeles County Superior Court Judge Susan Bryant-Deason instead conducted a bench trial and concluded the San Diego ruling itself resulted from a defect in the bidding process, then entered judgment in favor of Phelps for nearly $3 million.
The CDCR appealed that ruling to the California 2nd Appellate District Court, which concluded Bryant-Deason should’ve ruled on the pleaded material, precluding a bench trial. Presiding Justice Laurence Rubin wrote the opinion, which was published Feb. 25. Justice Dorothy Kim concurred in full, while Justice Lamar Baker concurred in part.
The panel said the history of the state law governing public contracts shows lawmakers were trying to ease the concerns of contractors who would be forced to reimburse public agencies for failed agreements even if the contractor had done everything correctly.
“As eventually enacted, the exception was limited to those cases where that defect was solely the fault of the public entity,” Rubin wrote. “But it is the defect for which the contract is invalidated – not the invalidation itself – which must be the fault of the public entity.”
Rubin said even if the panel did agree CDCR bore some responsibility to reject Phelps’ flawed bid, the law would allow recovery only if Phelps showed CDCR was entirely at fault for the contract’s failure. Rubin explained the dispute around an amended bidder declaration submitted the day after the initial bid and said Phelps shared some of the blame because it agreed to let the initial bid stand alone, and the flaws in that bid ultimately undid the contract.
Although the panel sent the issue back to Bryant-Deason with directions to vacate her order denying CDCR’s motion for judgment on the pleadings then to grant that motion and proceed, Rubin did say Phelps is entitled to be paid “for its substantial efforts returning the worksite to a safe condition” after the San Diego court issued the injunction that forced Phelps to stop its work.
Phelps is represented in the matter by Watt, Tieder, Hoffar & Fitzgerald, David F. McPherson and Robert C. Shaia.
California Attorney General’s Office attorneys represented the CDCR.