Filed 2/22/18; Certified for Publication 3/19/18 (order attached)
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
WEST COAST AIR CONDITIONING D071106 COMPANY, INC.,
Plaintiff and Respondent, (Super. Ct. No. 37-2015-00017334- v. CU-WM-CTL)
CALIFORNIA DEPARTMENT OF CORRECTIONS AND REHABILITATION,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of San Diego County, Joel M.
Pressman and Joan M. Lewis, Judges. Affirmed.
Xavier Becerra, Attorney General, Douglas J. Woods, Assistant Attorney General,
Stepan A. Haytayan and Jeffrey A. Rich, Deputy Attorneys General, for Defendant and
Appellant.
Finch, Thornton & Baird, P. Randolph Finch Jr. and Jason R. Thornton, for
Plaintiff and Respondent. We consider in this case 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 State of 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 (subject project) 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.
Although 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 (see Pub. Contract Code, 1 § 10108, discussed post) 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.
As we explain, we conclude the court properly exercised its broad equitable
authority in awarding West Coast its bid preparation costs of $250,000. We thus reject
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. Affirmed.
1 Unless otherwise noted, all further statutory references are to the Public Contract Code. 2 FACTUAL AND PROCEDURAL OVERVIEW
CDCR in February 2015 published an "invitation for bids" (IFB) for the subject
project, which involved "building a new central plant" to provide air conditioning in, and
a reroof of, the Ironwood prison, an "active" and "[f]ully occupied prison." In
compliance with California law (see § 10108), the IFB provided the "[a]ward of the
contract, if it will be awarded, will be to the lowest responsible bidder whose proposal
complies with all requirements prescribed." West Coast, HP, and four other companies
submitted bids to construct the subject project.
In early May 2015, CDCR awarded HP the contract for the subject project, as HP
then was ostensibly found to be the lowest bidder with a bid of about $88 million. CDCR
issued a list of bidders that showed West Coast was the next lowest bidder with a bid of
about $98 million. Both bids were less than CDCR's engineer's estimate of $103 million
for the subject project.
In mid-May 2015, West Coast filed a verified petition for a writ of ordinary
mandate pursuant to Code of Civil Procedure section 1085, subdivision (a) and a
complaint seeking injunctive relief and asserting a promissory estoppel cause of action
(collectively, petition) against CDCR and real party in interest HP. 2 In the petition, West
Coast sought to enjoin CDCR from awarding the contract for the subject project to HP
and/or to nullify that award. As relevant to this appeal, in the prayer for relief West
2 West Coast's third cause of action for promissory estoppel, the only claim at issue in this appeal, did not include real party in interest HP. 3 Coast requested "general damages in an amount sufficient to reimburse West Coast for its
bid preparation costs" and interest.
In support of its petition, West Coast alleged HP's bid suffered from myriad
defects, including failing to list the license numbers of about 17 subcontractors among
other missing subcontractor information, which the petition alleged gave HP additional
time over its competitors to "solicit, receive and negotiate subcontractor prices and price
cuts"; submitting a bid containing "typographical/arithmetical errors"; and submitting a
revised bid after the deadline that included substantial alterations to the percentages of
work that HP's subcontractors would perform. Because these changes materially affected
HP's bid price, West Coast's petition further alleged CDCR as a matter of law was
precluded from waiving the defects in HP's bid.
On July 1, 2015, West Coast filed a summary judgment type motion asking the
court to grant its petition. Despite West Coast's pending motion, about a week later
CDCR issued a notice for HP to proceed with the subject project.
On September 11, 2015, the court granted West Coast's motion to set aside the
contract award to HP. In so doing, the court found the mathematical errors in HP's bid,
which HP admitted, were "material" to the bid price and that HP could have withdrawn
its bid pursuant to section 5103, discussed post. Based on this finding, the court ruled
HP's bid was nonresponsive as a matter of law. The court also then ruled that the
contract for the subject project "should have been awarded to West Coast."
On September 16, 2015, West Coast sent CDCR a letter asking it to issue
immediately a "stop work order" on the HP contract based on the court's September 11
4 order. West Coast in its letter also requested that it be awarded the contract for the
subject project, which West Coast noted would "moot[]" its promissory estoppel cause of
action in its petition. About a week later, CDCR responded that the September 11 order
was a tentative decision only, refused to order HP to stop work, and rejected West Coast's
request that it be awarded the contract.
On October 6, 2015, the court granted West Coast's ex parte application for a
temporary injunction and ordered HP to stop immediately all work on the subject project
"except tasks necessary for safe and prompt cessation of work." 3 The court set the
permanent injunction hearing for December 11, 2015.
The court at the December 11 hearing granted West Coast's request for a
permanent injunction prohibiting HP "from performing any work on the [subject project]
pursuant to the contract between HP and [CDCR]," which the court in its September 11
order had found was "illegal." In granting the permanent injunction, the court found that
West Coast would be harmed without an injunction and that it had no adequate remedy at
law. In its December 11 order, the court agreed with the "argument raised by CDCR . . .
that the [c]ourt cannot order that the contract be awarded to West Coast." (Italics added.)
The court noted that specific finding was also reflected in its December 9, 2015 statement
of decision.
3 CDCR appealed the October 6, 2015 order granting West Coast's application for a temporary injunction. This court in January 2017 found CDCR's appeal moot in light of the trial court's order granting West Coast's request for a permanent injunction. (See West Coast Air Conditioning Company, Inc. v. California Department of Corrections and Rehabilitation (Jan. 9, 2017, D069033) [nonpub. opn.].) 5 West Coast's promissory estoppel cause of action was tried on May 9, 2016.
Before trial, West Coast and CDCR stipulated to the following facts: "a. The bid
documents published by CDCR for the Project stated a contract for the Project would be
awarded to the lowest responsible bidder"; "b. CDCR received bids for the Project on
April 30, 2015"; "c. CDCR awarded the Project contract to HP and on July 7, 2015,
issued a notice to HP to proceed with the Project contract"; "d. Work on the Project
began in July 2015"; "e. Pursuant to the temporary restraining order issued on October 6,
2105, CDCR and HP halted all work on the Project and have not recommenced any
work"; "f. CDCR may endeavor to prove the amount of work completed by HP on the
Project through declaration and documents"; and "g. West Coast's reasonable costs to
prepare its bid submitted to CDCR on April 30, 2015 for the Project were and are in the
sum of $250,000."
Two issues were tried in connection with West Coast's claim for $250,000. First,
CDCR in its trial brief raised for the first time several grounds to support its contention
that West Coast's bid was not responsive. And second, whether West Coast was entitled
to its bid preparation costs despite being awarded injunctive relief but not the contract to
construct the subject project.
Regarding its first contention, CDCR argued West Coast's bid was not responsive
because it failed to include the "subcontractors' license types," "complete addresses," and
the "subcontractors' corresponding percentages of the total Project bid price" for subs
included in the West Coast bid. CDCR further argued that, as to subcontractors
California Auger Boring (CAB) and Precision Air Balance (PAB), West Coast's bid had
6 listed incorrect subcontractor license numbers; and that as to one subcontractor, Chem
Pro Lab, West Coast's bid had failed to list that subcontractor's license number.
Subject to an ongoing relevancy objection by CDCR, West Coast's chairman of
the board, David Dudley, testified on the issue of whether West Coast's bid was
"responsive." 4 The record shows CDCR neither cross-examined Dudley at the
conclusion of his direct testimony nor offered any evidence to contradict his testimony.
Specifically, Dudley testified that West Coast obtained the plans and
specifications for the subject project in February 2015; that the plans were contained in
three volumes comprised of "several hundred sheets" of paper; that the specifications
were contained in two volumes comprised of "probably a ream and a half of paper each";
that West Coast went "sheet by sheet" through the plans and specifications and
determined it was interested in bidding on the subject project; that it then went "trade by
trade" to identify how much work on the subject project it would perform versus its subs;
that unlike many other contractors, West Coast put forth a "tremendous amount of work"
in preparing its bids including in connection with the subject project; that unlike HP and
other contractors who also bid on the subject project, West Coast intended to complete
4 Before Dudley took the stand, CDCR proffered the deposition testimony of two of its officials that, if CDCR found a bid was "not responsive" and thus did not meet the bid requirements, CDCR would send that bidder a "disqualification letter." After taking the stand, Dudley confirmed that West Coast had never received a "disqualification letter" from CDCR concerning the subject project. To the contrary, Dudley confirmed that, prior to any dispute, West Coast had received a list from CDCR identifying the "prime bidders" for the subject project and that West Coast was ranked second behind HP. Dudley concluded from this listing that CDCR then had found West Coast's bid to be responsive but not the lowest. 7 "all the mechanical work" itself; and that as such, West Coast spent more time preparing
its bid than most other contractors who, according to Dudley, instead merely "pick[ed] up
the phone" and called a mechanical company to do the work as a subcontractor.
Dudley further testified that West Coast was the second lowest bidder as far as
price, but was the "low responsive bidder"; that over the 40 years he has worked for West
Coast, he has been involved in preparing bids on "thousands" of projects; and that the
first time West Coast learned CDCR considered West Coast's bid to be nonresponsive
was when CDCR submitted its trial brief in connection with the May 9 trial.
Dudley next testified regarding the various issues CDCR alleged made West
Coast's bid nonresponsive. With respect to the allegation that West Coast's bid failed to
include subcontractor license types for about 20 subcontractors, Dudley explained that
contractors bidding on the subject project were required to submit questions to CDCR by
March 24, 2015; that one question which arose prebid was whether it was sufficient to
include license classifications "A," "B," or "C" under "License Type"; and that CDCR
responded in an addendum, "[b]idder to provide full license number on form."
According to Dudley, the "full license number" is the number "issued by the California
[Contractors] State License . . . Board for contracting as a contractor," much like a
driver's license number issued to a driver. Dudley confirmed that West Coast's bid
included the "actual contractor's license number" for each subcontractor, as CDCR had
clarified in the addendum.
CDCR next claimed that West Coast's bid was nonresponsive because it failed to
list the percentage of work that would be performed by West Coast's subcontractors.
8 Dudley testified that West Coast's bid listed the percentage of work that would be
performed by each subcontractor for whom West Coast was seeking disabled veteran
business enterprise (DVBE) 5 credit, and that the IFB required a 3 percent mandatory
participation goal. He further testified that, if a bid reached a 5 percent DVBE credit, the
bid was entitled to a $500,000 incentive, which in fact West Coast received in this case.
According to Dudley, West Coast listed the percentages of work performed by all
of its DVBE subcontractors. However, for all non-DVBE subcontractors, West Coast
listed the subcontract price for each, but not the percentages because West Coast was not
seeking any DVBE credit for these remaining subcontractors. Dudley noted there was no
requirement in either the IFB or any of the prebid addenda requiring a bidder to list
percentages for subcontractors that were not being claimed for DVBE incentive credit.
CDCR alleged West Coast's bid also was deficient because it failed to include for
each subcontractor the subcontractor's name; business location, including street address,
city, state and zip code; and contact person, including telephone and facsimile numbers,
and e-mail addresses. Dudley confirmed all required subcontractor information was
contained in West Coast's bid, despite CDCR's contention otherwise. As noted, Dudley's
testimony, including on this issue, was not refuted by CDCR.
CDCR also alleged West Coast's bid contained an error with respect to two of its
subcontractors. As to CAB, Dudley admitted the West Coast bid had mistakenly
transposed two numbers when it listed this sub's license number. However, Dudley
5 Dudley testified that a DVBE business was a "subcontractor or vendor that's owned and operated by a disabled veteran." 9 confirmed West Coast's bid had properly listed the Department of Industrial Relations
(DIR) public works contractor number for CAB, which then could be used to confirm this
subcontractor's license number via the DIR's website. Dudley noted HP's bid had not
listed any subcontractor license numbers but instead had included the DIR numbers of its
subcontractors, which had passed muster with CDCR. As to the other subcontractor,
PAB, Dudley testified the information in West Coast's bid with respect to this sub was
absolutely correct.
Finally, CDCR alleged West Coast's bid was nonresponsive because it failed to
include a subcontractor's license and/or DIR number for Chem Pro Lab. However,
Dudley testified this company was to "provide chemicals and flushing agents to clean and
treat the water pipe system for the air conditioning" portion of the subject project. As
such, he further testified Chem Pro Lab was not a subcontractor but instead provided a
service in connection with the subject project. In fact, Dudley noted Chem Pro Lab
neither had a subcontractor's license nor a DIR number.
Dudley was asked whether the court's issuance of an injunction on December 11
provided West Coast "effective relief." Dudley noted that West Coast's bid included
several subcontractors also listed by HP, including the electrical subcontractor who
already had started work at the subject project when HP's bid was found illegal as a
matter of law. After the court granted West Coast's writ of mandate, Dudley testified that
he reached out to CDCR officials and indicated that West Coast was still ready, willing,
and able to take on the subject project. West Coast even agreed to credit against its bid
the work HP had already performed on the subject project.
10 Dudley testified that he also personally contacted the electrical subcontractor that
had started work under the HP contract and that this subcontractor tentatively agreed to
continue working on the subject project if West Coast obtained the contract. Dudley also
communicated with "all" of West Coast's other "major subs" and confirmed they too
would be willing to commence and/or continue work on the subject project if the contract
was awarded to West Coast. CDCR, however, refused to award the contract to West
Coast after the HP contract was nullified.
Based on conversations with CDCR officials, Dudley testified that CDCR was
never going to allow West Coast to step in and proceed with the subject project. Dudley
also testified that, since the injunction issued, no work has been done on the subject
project; that if CDCR sought rebids for the subject project, West Coast would have to
start the bid process anew because prices and labor costs had changed; and that, unless
the court awarded West Coast its bid preparation costs, all of West Coast's efforts in
preparing its bid "was for nothing."
Dudley further testified that West Coast in any event would not bid on any future
project involving CDCR "[b]ecause of the way CDCR has addressed and handled this
whole situation, both toward [West Coast] and [its] current actions towards [HP] and the
subcontractors who did work at CDCR's direction[, which] has made it clear that the
administration of CDCR does not care to follow public contract law or ethical treatment
of contractors."
CDCR next proffered the declaration testimony of one of its project managers who
stated that about 8 percent of the work at the subject project was completed when the
11 injunction issued; but that virtually all such work performed before the work stoppage
was "of no value." As a result, the project manager opined that about "99 percent of the
project's work remains to be performed when the project is rebid."
On May 16, 2016, the court issued its decision after trial awarding West Coast the
stipulated sum of $250,000 on its promissory estoppel cause of action. West Coast
subsequently was awarded prejudgment interest of about $3,644. This appeal followed. 6
DISCUSSION
A. Responsiveness
The issue of whether the court erred in awarding West Coast $250,000 for its bid
preparation costs involves a mixed question of law and fact. Specifically, whether West
Coast's bid was "responsive" is a question of fact. (See MCM Const. Inc. v. City &
County of San Francisco (1998) 66 Cal.App.4th 359, 368 [noting a bid is responsive "if it
promises to do what the bidding instructions require"]; see also Flintco Pacific, Inc. v.
TEC Management Consultants, Inc. (2016) 1 Cal.App.5th 727, 734 (Flintco) [noting the
" 'existence of an estoppel is generally a question of fact for the trial court whose
determination is conclusive on appeal unless the opposite conclusion is the only one that
can be reasonably drawn from the evidence' "], quoting Driscoll v. City of Los Angeles
(1967) 67 Cal.2d 297, 305.)
6 The court postjudgment denied the motion of West Coast to recover its reasonable attorney fees under Code of Civil Procedure section 1021.5, which is the subject of a separate, albeit related, appeal in case number D071611 that is being filed concurrently with the instant appeal. 12 However, the issue of whether West Coast was authorized under section 10108 to
recover such costs is a question of law. (See Kajima/Ray Wilson v. Los Angeles County
Metropolitan Transp. Auth. (2000) 23 Cal.4th 305, 313 (Kajima) [interpreting Pub.
Utilities Code, § 130232, subd. (a), which is similar to § 10108 at issue in the instant
case, to allow the lowest responsible bidder to recover bid preparation costs but not lost
profits].)
As summarized ante, CDCR asserted several grounds at trial to show West Coast's
bid was nonresponsive. West Coast in turn proffered the testimony of Dudley, its
chairman of the board who has worked for West Coast for 40 years, to refute CDCR's
claim. Other than the bid document itself, CDCR offered no evidence opposing Dudley's
testimony. Based on such testimony, the court found West Coast's bid was responsive, as
also summarized ante.
We conclude there is overwhelming evidence in the record, as summarized ante,
to support the court's finding that West Coast's bid was responsive. (See Thompson v.
Asimos (2016) 6 Cal.App.5th 970, 981 [noting the oft-cited principle that in "reviewing a
judgment . . . following a bench trial, we . . . apply a substantial evidence standard of
review to the trial court's findings of fact," and further noting that "[u]nder this
deferential standard of review, findings of fact are liberally construed to support the
judgment and we consider the evidence in the light most favorable to the prevailing party,
drawing all reasonable inferences in support of the findings"]; see also Flintco, supra, 1
Cal.App.5th at p. 735.)
13 CDCR nonetheless contends on appeal that the court erred when it admitted
Dudley's testimony because the court was limited to the "four corners" of West Coast's
bid in determining the responsiveness issue. To support this contention, CDCR relies on
the rule that whether a bid is responsive is "[u]sually . . . determined from the face of the
bid without outside investigation or information." (Valley Crest Landscape, Inc. v. City
Council (1996) 41 Cal.App.4th 1432, 1438, citing Taylor Bus Service, Inc. v. San Diego
Board of Ed. (1987) 195 Cal.App.3d 1331, 1342 (Taylor).) We find this general rule
inapplicable to the present situation.
First, in our view, it would be grossly unfair to preclude West Coast from
proffering evidence on the issue of whether its bid was responsive when CDCR waited
until the eve of trial to raise this issue for the first time and when the court already had
granted West Coast's writ of mandate petition and request for permanent injunction.
Indeed, the overarching issue in this case is not whether CDCR considered West
Coast's bid responsive when CDCR was initially analyzing the bids it received for the
subject project and determining whether to award a contract, if at all, to the lowest
responsible bidder. (See § 10108.) Rather, the issue in the instant case is whether West
Coast, after proving the elements of its promissory estoppel cause of action, was
nonetheless precluded as a matter of law from recouping its bid preparation costs, as
CDCR contends, because West Coast obtained a permanent injunction preventing HP
from continuing to work under the illegal contract. As such, we reject CDCR's
contention the court erred in considering the trial testimony of Dudley in finding West
Coast's bid was responsive.
14 Second, there is sufficient evidence in the record to support the (tacit) finding that
CDCR initially found West Coast's bid responsive when CDCR awarded HP the contract
for the subject project. The deposition testimony of CDCR officials offered by CDCR at
trial established that, if CDCR found a bid did not meet the bid requirements, CDCR
would send the bidder a "disqualification letter." Dudley's uncontradicted testimony was
that West Coast received no such letter from CDCR after West Coast submitted its bid on
the subject project. Nor was there any evidence in the record that CDCR otherwise
provided West Coast with any notice that its bid was not responsive. (See Taylor, supra,
195 Cal.App.3d at p. 1343 [noting a bidder such as West Coast whose bid is deemed not
responsive by an agency "is entitled to notice of that fact and is entitled to submit
materials . . . concerning the issue of responsiveness," although an agency is not required
to conduct a hearing or produce findings].)
Third, limiting the determination of whether a bid is responsive to the four corners
of a bid—particularly when, as here, a public works contract was found to be misawarded
by a public agency—would undermine the public policy in competitive bidding laws of
" 'ensur[ing] full compliance with competitive bidding statutes as a means of protecting
the public from misuse of public funds,' 'provid[ing] all qualified bidders with a fair
opportunity to enter the bidding process, thereby stimulating competition in a manner
conducive to sound fiscal practices,' and 'eliminat[ing] favoritism, fraud, and corruption
in the awarding of public contracts.' " (See Kajima, supra, 23 Cal.4th at p. 314, quoting
§ 100, subds. (b)-(d).)
15 Finally, we reject CDCR's contention that West Coast should be judicially
estopped from contending its own bid was responsive in connection with the required
subcontractor information because West Coast had earlier argued that HP's subcontractor
information was insufficient. We conclude this contention is borderline frivolous.
The record shows the court invalidated HP's bid and found it illegal as a matter of
law based on HP's admission that its bid contained arithmetic errors that were "material
to the bid price," which in turn could have led HP to withdraw its bid pursuant to section
5103. 7 What's more, the record shows the court found the "failure to list subcontractor
license numbers" was a "waivable defect" because CDCR was able to obtain such
information from the DIR. Thus, the court did not rely on subcontractor information, or
the lack thereof, in finding HP's bid was unlawful as a matter of law.
We interpret CDCR's estoppel argument as a thinly disguised challenge to the
court's finding that West Coast's bid provided sufficient subcontractor information to
make its bid responsive. As a court of review, we cannot, and will not, make a different
finding when substantial evidence in the record supports one or more findings of the trier
of fact, which as noted, is the case here with respect to the responsiveness issue. (See
Thompson, supra, 6 Cal.App.5th at p. 981; Flintco, supra, 1 Cal.App.5th at p. 735.)
7 Section 5103 provides a bid may be withdrawn if the "bidder shall establish to the satisfaction of the court that: [¶] (a) A mistake was made. [¶] (b) He or she gave the public entity written notice within five working days, excluding Saturdays, Sundays, and state holidays, after the opening of the bids of the mistake, specifying in the notice in detail how the mistake occurred. [¶] (c) The mistake made the bid materially different than he or she intended it to be. [¶] (d) The mistake was made in filling out the bid and not due to error in judgment or to carelessness in inspecting the site of the work, or in reading the plans or specifications." 16 B. Recovery of Bid Preparation Costs
CDCR next contends the court erred as a matter of law in awarding West Coast its
bid preparation costs because West Coast already had obtained "effective" relief when the
court granted its request for a permanent injunction preventing HP from continuing to
perform the contract on the subject project. In support of this theory, CDCR relies
exclusively on Kajima, supra, 23 Cal.4th 305.
In Kajima, our high court concluded the lowest responsible bidder involved in two
rounds of bidding for a public works project was entitled to recover a portion of its bid
preparation costs after the public agency, the Los Angeles Metropolitan Transportation
Authority (MTA), initially accepted no bids in "round 1," as was its right, and
subsequently awarded the contract for the project in "round 2" to an entity that turned out
not be the lowest responsible bidder. (Kajima, supra, 23 Cal.4th at p. 308.) The Kajima
court acknowledged that under such circumstances, a bidder deprived of a public contract
because of a "misaward" of that contract " 'has neither a tort nor a breach of contract
action against the public agency,' " but must instead rely on a promissory estoppel theory
to recover monetary relief, if at all. (Id. at p. 315, fn. 2.)
In reaching its decision, the Kajima court noted the application of a promissory
estoppel theory to the "disappointed bidder context" was an "imperfect[]" "fit[]":
"Promissory estoppel was developed to do rough justice when a party lacking contractual
protection relied on another's promise to its detriment. Here, we use promissory estoppel
primarily to further certain public policies by creating a damages remedy for a public
entity's statutory violation. Moreover, unlike the typical promissory estoppel situation,
17 the MTA retains discretion to reject all of the bids as it did in round 1; the lowest bidder
has no absolute right to be awarded the contract." (Kajima, supra, 23 Cal.4th at p. 315.)
As discussed ante, the Kajima court noted that allowing under a promissory
estoppel theory "some measure of damages once injunctive relief is no longer effectively
available" would actually promote the "purposes of the competitive bidding laws by
encouraging proper challenges to misawarded public contracts by the most interested
parties, and deterring government misconduct." (Kajima, supra, 23 Cal.4th at p. 314.)
In addressing what it meant by "effective" injunctive relief, the Kajima court in a
footnote stated: "Of course, as the parties agree, the most effective enforcement of the
competitive bidding law is to enforce by injunction the representation that the contract
will be awarded to the lowest responsible bidder. This is generally done by setting aside
the contract award to the higher bidder. (See, e.g., City of Inglewood[-Los Angeles
County Civic Center Authority v. Superior Court (1972)] 7 Cal.3d [861,] 870; Monterey
Mechanical [Co. v. Sacramento Regional County Sanitation Dist. (1996)] 44 Cal.App.4th
[1391,] 1412.) However, as a practical matter, by the time the basis for relief is
persuasively demonstrated, the underlying contract may already have been substantially
or fully performed. That is apparently what happened here, and this scenario seems
recurring. (See, e.g., Swinerton [& Walberg Co. v. City of Inglewood-L.A. County Civil
Center Authority (1974)] 40 Cal.App.3d [98,] 103 [noting 'it is now too late' for
injunctive relief to be effective].) Hence, once injunctive relief is no longer an effective
remedy, the question arises whether monetary relief is available, and if so, what the
18 appropriate measure of damages is in this context." (Kajima, supra, 23 Cal.4th at p. 313,
fn. 1.)
As noted, CDCR contends the application of Kajima to the instant case precluded
the court as a matter of law from awarding West Coast its bid preparation costs because
West Coast already had obtained "effective" relief when the court granted its permanent
injunction. We disagree.
Kajima makes clear that damages generally will not be available under a
promissory estoppel theory unless it is possible both to set aside the misawarded contract
and to award the contract instead to the lowest responsible bidder. Here, the HP contract
was set aside by ordinary writ of mandate, thus satisfying the first "element" of Kajima.
The difficulty in the instant case is the second "element"—awarding the contract to the
next lowest responsible bidder. As noted ante, CDCR refused to award West Coast the
contract to construct the subject project even after the writ of mandate issued.
Unlike Kajima where our high court found the underlying public works contract
had "been substantially or fully performed" (see Kajima, supra, 23 Cal.4th at p. 313,
fn. 1), in the instant case when the court found the HP contract illegal and set it aside only
about 8 percent of the work had been completed on the subject project. In addition,
CDCR submitted uncontradicted evidence that most of the work performed on the subject
project was for naught, as CDCR estimated that 99 percent of the project remained
uncompleted when HP stopped work.
What's more, the record shows the court in its December 9 statement of decision
and in its December 11 order accepted CDCR's argument that the court could neither then
19 find West Coast's bid to be responsive—a finding which only came much later and only
in connection with the award of West Coast's bid preparation costs—nor enforce the
representation of CDCR to award the contract for the subject project to the lowest
responsible bidder, namely West Coast. (See § 10108.) The court refused to enforce this
representation, despite the recognition of our high court in Kajima that, once an unlawful
contract is set aside, enforcement by injunction (and not by writ of mandate) of the
"representation that the contract will be awarded to the lowest responsible bidder" is the
"most effective enforcement of the competitive bidding law." (See Kajima, supra, 23
Cal.4th at p. 313, fn. 1; see also Eel River Disposal and Resource Recovery, Inc. v.
Humboldt (2013) 221 Cal.App.4th 209, 240, fn. 12 [noting that the trial court on remand
should consider whether to award to the low bidder a 10-year exclusive franchise to
collect and dispose of solid waste because the "10-year exclusive franchise has not yet
been fully or even substantially performed by real party in interest," and thus further
noting that "it may in this case be possible to enforce by injunction the representation of
the [request for proposal] that the franchise will be awarded to the lowest responsible
bidder" (italics added)]; but see Baldwin–Lima–Hamilton Corp. v. Superior Court (1962)
208 Cal.App.2d 803, 817 [noting where public agency has reserved, in its advertisement
for bids, the right to reject all bids, a court has no power to compel an agency by writ of
mandate to award the contract to the next highest bidder even if the agency improperly
awarded the public works contract to a nonresponsive bidder]; Charles L. Harney, Inc. v.
Durkee (1951) 107 Cal.App.2d 570, 576–578 [concluding no right exists in the lowest
bidder to compel the acceptance of its bid by a writ of mandate when the competitive
20 bidding statute (i.e., former Gov. Code § 14335) allowed for the rejection of all bids of a
public improvement project if the acceptance of the lowest responsible bid was not in the
best interests of the state].)
The issue of whether the court was correct in finding it could not compel CDCR to
award the contract for the subject project to West Coast after the court nullified the HP
contract is not before this court. (See Kajima, supra, 23 Cal.4th at p. 313, fn. 1.) Neither
party has briefed the issue of what, if any, remedies were available to West Coast other
than recovery of its bid preparation costs. 8 And it is quite clear from the record in this
case that neither party appears at all interested in entering into a contractual relationship
with the other party, including for the subject project which involves nearly a $100
million contract.
We conclude that the issuance of a permanent injunction in favor of West Coast,
the lowest responsible bidder, without either an award of the public works contract to it
or an award of damages equal to its bid preparation costs, would result in an inadequate
remedy to West Coast. Indeed, West Coast prepared its bid and incurred $250,000 in
costs in reliance on CDCR's representation that if a contract was awarded, which turned
8 Although the parties appear to agree with the court that it lacked the authority to enforce by injunction the representation of CDCR to award the contract on the subject project to the lowest responsible bidder (i.e., West Coast) after it granted West Coast mandamus relief, we note in passing that we are not bound to accept concessions of the parties " 'establishing the law applicable to a case.' " (See Bell v. Tri–City Hospital Dist. (1987) 196 Cal.App.3d 438, 449; see also Tun v. Wells Fargo Dealer Services, Inc. (2016) 5 Cal.App.5th 309, 327 [refusing to accept the defendant's concession made during oral argument regarding the construction of Civil Code, § 2983.4, and the right of the plaintiff to keep about $15,000 tendered by the defendant].) 21 out to be the case, it would be to the lowest responsible bidder, which turned out not to be
the case. (See § 10108; see also Kajima, supra, 23 Cal.4th at p. 313, fn. 1.)
Allowing West Coast to recover its bid preparation costs under the circumstances
of this case will further the important public policies underlying the competitive bidding
laws of "encouraging proper challenges to misawarded public contracts by the most
interest parties, and deterring government misconduct" (Kajima, supra, 23 Cal.4th at
p. 314) and promote "rough justice" between West Coast and CDCR (see id., at p. 315).
Indeed, Dudley testified that he personally attempted to negotiate a resolution of
West Coast's dispute by suggesting more than once that CDCR award West Coast the
contract for the subject project. Dudley also testified that West Coast was ready, willing,
and able to perform the contract once the court nullified the HP contract; and that West
Coast had secured from many of its key subcontractors a commitment to work, or
continue to work as the case may be (i.e., the electronic subcontractor), on the subject
project under a new contract with West Coast.
Yet, despite what appeared to be a relatively smooth transition from the illegal HP
contract to a new contract with West Coast, and despite West Coast agreeing to offset
from its bid the work already performed by HP under the illegal contract, Dudley testified
that CDCR was never going to award West Coast the contract to build the subject project,
which CDCR has not denied.
On this record, we thus conclude the court properly exercised its broad equitable
authority when it awarded West Coast its bid preparation costs in the stipulated sum of
$250,000 under a promissory estoppel theory.
22 DISPOSITION
The award in the stipulated sum of $250,000 to West Coast for recovery of its bid
preparation costs is affirmed. Each party to bear its own costs on appeal.
BENKE, J.
WE CONCUR:
McCONNELL, P. J.
IRION, J.
23 Filed 3/19/18
CERTIFIED FOR PUBLICATION
Plaintiff and Respondent, (Super. Ct. No. 37-2015-00017334- CU-WM-CTL) v. ORDER GRANTING PUBLICATION CALIFORNIA DEPARTMENT OF CORRECTIONS AND REHABILITATION,
THE COURT:
The opinion in this case filed February 22, 2018, was not certified for publication. It appearing the opinion meets the standards for publication specified in California Rules of Court, rule 8.1105(c), West Coast Air Conditioning Company, Inc.'s request pursuant to California Rules of Court, rule 8.1120(a) for publication is granted.
IT IS HEREBY CERTIFIED that the opinion meets the standards for publication specified in California Rules of Court, rule 8.1105(c); and
ORDERED that the words "Not to Be Published in the Official Reports" appearing on page one of said opinion be deleted and the opinion herein be published in the Official Reports. McCONNELL, P. J.
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