R.J. Land & Associates Construction Co. v. Kiewit-Shea

81 Cal. Rptr. 2d 615, 69 Cal. App. 4th 416, 99 Daily Journal DAR 709, 99 Cal. Daily Op. Serv. 615, 1999 Cal. App. LEXIS 44
CourtCalifornia Court of Appeal
DecidedJanuary 21, 1999
DocketB125237
StatusPublished
Cited by16 cases

This text of 81 Cal. Rptr. 2d 615 (R.J. Land & Associates Construction Co. v. Kiewit-Shea) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
R.J. Land & Associates Construction Co. v. Kiewit-Shea, 81 Cal. Rptr. 2d 615, 69 Cal. App. 4th 416, 99 Daily Journal DAR 709, 99 Cal. Daily Op. Serv. 615, 1999 Cal. App. LEXIS 44 (Cal. Ct. App. 1999).

Opinion

Opinion

VOGEL (C. S.), P. J.

Introduction

This is an action by a listed subcontractor against the prime contractor of a public work. The subcontractor asserts a statutory cause of action pursuant to the Subletting and Subcontracting Fair Practices Act (Pub. Contract Code, § 4100 et seq.), 1 and Southern Cal. Acoustics Co. v. C. V. Holder, Inc. (1969) 71 Cal.2d 719, 727 [79 Cal.Rptr. 319, 456 P.2d 975] (hereafter Southern Cal. Acoustics), alleging that the prime contractor’s bid to the public agency listed plaintiff as the subcontractor designated to perform “glass paver panel” work, and the prime contractor thereafter unlawfully substituted another subcontractor to do that work.

The parties made cross-motions for summary judgment. The trial court granted the prime contractor’s motion and entered a judgment that the subcontractor take nothing. The subcontractor appeals.

We reverse. The prime contractor’s contention that the subcontractor has no statutory right to perform the work, because the prime contractor “inadvertently listed two subcontractors” to do that work, is without merit. The trial court should have denied the prime contractor’s motion and granted the subcontractor’s alternative motion for summary adjudication of the prime contractor’s first affirmative defense. The subcontractor was not entitled, however, to summary adjudication of two other issues.

Legal Background

In order to make understandable the significance of the facts in the factual statement, we first give the legal context in which they arose. The Subletting and Subcontracting Fair Practices Act (hereafter the act), section 4100 et seq., regulates contracts for public works. It requires the prime contractor to list, in its bid to the public agency, the subcontractors who will be used, and strictly regulates the circumstances under which the listed subcontractors may be changed. Its purpose is to protect the public and *420 subcontractors from the evils of “bid shopping and bid peddling.” In “bid shopping,” a prime contractor uses the bid of the listed subcontractor' to pressure other subcontractors to do the work for even less, to the contractor’s profit. In “bid peddling,” conversely, other subcontractors undercut the known bid of the listed subcontractor. (Southern Cal. Acoustics, supra, 71 Cal.2d 719, 726, fn. 7; Valley Crest Landscape, Inc. v. City Council (1996) 41 Cal.App.4th 1432, 1438 [49 Cal.Rptr.2d 184].) The Legislature has expressly found, “the practices of bid shopping and bid peddling in connection with the construction, alteration, and repair of public improvements often result in poor quality of material and workmanship to the detriment of the public, deprive the public of full benefits of fair competition among prime contractors and subcontractors, and lead to insolvencies, loss of wages to employees, and other evils.” (§ 4101.)

To achieve the legislative purpose, the act: (1) requires the prime contractor to list in its bid each subcontractor who will perform work in an amount in excess of one-half of 1 percent of the prime contractor’s bid, to describe the work which will be done by each subcontractor, and to list only one subcontractor for each portion as defined in the prime contractor’s bid (§ 4104); (2) requires the prime contractor itself to perform any work for which the prime contractor either fails to specify a subcontractor or specifies more than one subcontractor for the same portion of work (§ 4106); and (3) prohibits the prime contractor to substitute any other subcontractor for the subcontractor listed in the original bid, except in specified narrow circumstances (§§ 4107, 4107.5). Section 4107 permits the awarding authority to consent to substitution of a different subcontractor under specified conditions, all but one of which relate to the unwillingness or inability of the listed subcontractor to perform the work. (§ 4107, subd. (a) [(1) subcontractor refuses to execute subcontract, (2) subcontractor becomes bankrupt or insolvent, (3) subcontractor fails or refuses to perform, (4) subcontractor fails or refuses to meet bond requirements, (6) subcontractor not licensed, (7) awarding authority determines subcontractor’s work is substantially unsatisfactory or not in substantial accordance with the specifications, or is substantially delaying or disrupting the progress of the work].) The other condition, in section 4107, subdivision (a)(5), occurs when the prime contractor demonstrates to the awarding authority that the name of the subcontractor listed in the original bid was an inadvertent clerical error, but this condition is “subject to the further provisions set forth in Section 4107.5.” Section 4107.5 requires that a prime contractor’s claim of inadvertent clerical error in the listing of the subcontractor be made “within two working days after the time of the prime bid opening by the awarding authority,” with timely notice to both the listed subcontractor and the intended subcontractor, and *421 provides for a public hearing if the listed subcontractor timely objects. “The two-day written notice provision of section 4107.5 fosters [the legislative purpose of the act] by forcing the prime contractor to assert its error in short order, and on the record, thus minimizing the time in which the contractor can shop for lower bids and limiting the room for deceptive maneuver.” (Cal-Air Conditioning, Inc. v. Auburn Union School Dist. (1993) 21 Cal.App.4th 655, 668 [26 Cal.Rptr.2d 703].)

Any violation of the act subjects the prime contractor to statutory penalties (§ 4110) and disciplinary action by the Contractors State License Board (§ 4111). These penalties do not limit or diminish any legal or equitable rights or remedies a subcontractor may have against the prime contractor. (§ 4103, subd. (a).)

The fact that the prime contractor has listed a subcontractor in the prime contractor’s bid does not create a contract between them. (Southern Cal. Acoustics, supra, 71 Cal.2d at pp. 722-723.) But section 4107 creates a statutory duty of the prime contractor toward the subcontractor, because unless the statutory exceptions are satisfied, the prime contractor “ha[s] no right to substitute another subcontractor in place of’ the listed subcontractor; the statute “confers the right on the listed subcontractor to perform the subcontract unless statutory grounds for a valid substitution exist. Moreover, that right may be enforced by an action for damages against the prime contractor to recover the benefit of the bargain the listed subcontractor would have realized had he not wrongfully been deprived of the subcontract.” (Southern Cal. Acoustics, supra, 71 Cal.2d at pp. 726, 727, & fn. 9.)

Factual and Procedural Background

The Metropolitan Transportation Authority (MTA) invited bids for construction of a subway station at Vermont Avenue and Santa Monica Boulevard in Los Angeles. Defendant/respondent Kiewit-Shea, a joint venture, is the prime contractor, and plaintiff/appellant RJ.

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Bluebook (online)
81 Cal. Rptr. 2d 615, 69 Cal. App. 4th 416, 99 Daily Journal DAR 709, 99 Cal. Daily Op. Serv. 615, 1999 Cal. App. LEXIS 44, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rj-land-associates-construction-co-v-kiewit-shea-calctapp-1999.