Interior Systems, Inc. v. Del E. Webb Corp.

• Decision Date: 02 July 1981
• Citation: 175 Cal.Rptr. 301,121 Cal.App.3d 312
• Court: California Court of Appeals Court of Appeals
• Parties: INTERIOR SYSTEMS, INC., a corporation, Plaintiff and Appellant, v. DEL E. WEBB CORPORATION, a corporation, Defendant and Respondent. Civ. 60995.

Page 301

175 Cal.Rptr. 301

121 Cal.App.3d 312

INTERIOR SYSTEMS, INC., a corporation, Plaintiff and Appellant, v. DEL E. WEBB CORPORATION, a corporation, Defendant and Respondent.

Civ. 60995.

Court of Appeal, Second District, Division 2, California.

July 2, 1981.

Hillyer & Irwin, and Richard P. Edwards, San Diego, for plaintiff and appellant.

Parker, Milliken, Clark & O'Hara, and Ronald E. Cappai, Los Angeles, for defendant and respondent.

BEACH, Associate Justice.

NATURE OF APPEAL:

Subcontractor appeals from judgment of dismissal upon failure to amend after sustaining of demurrer with leave to amend.

FACTS:

By its first amended complaint plaintiff (appellant) alleged that it is in the business of subcontracting of cabinetry, millwork and related carpentry work. Defendant (respondent) is a general contractor engaged in bidding on prime contracts. Respondent was the successful bidder to do certain hospital construction for a public agency, the County Hospital Authority (Hospital). Prior to respondent being awarded the public work contract, appellant had submitted an oral telephonic bid to do a portion of the construction by subcontract. Appellant later confirmed its bid by letters to respondent. Appellant specifically excluded certain work from its bid. Respondent in bidding on the prime contract listed appellant as the subcontractor for the finished carpentry, millwork and interior woodwork. After respondent was accepted as the prime contractor, it submitted a written contract to appellant as the subcontractor. The written contract as submitted by respondent to appellant did not exclude the items which appellant had excluded from its bid and therefore appellant refused to sign the contract as submitted. Thereupon, respondent requested permission of Hospital to substitute another subcontractor for appellant because of the refusal. Appellant was notified and filed its objections and a hearing was held pursuant to section 4107 of the Government Code ¹. Respondent substituted another subcontractor. As a result of being substituted, appellant claimed damage of $50,685 incurred as a loss of the benefit of its bargain. Appellant alleged in general terms that respondent "wrongfully refused to permit plaintiff to perform such work" and that it was "wrongfully deprived of the subcontract."

Respondent demurred to the first amended complaint for its failure to state a cause of action and for uncertainty. In sustaining the demurrer, the trial court stated: "Demurrer is sustained with thirty days leave to amend on the grounds that it is uncertain what the ruling of Hospital was. If there was a specific finding that the substitution was proper, plaintiff is precluded from filing this action. The sole remedy is administrative mandate pursuant to section 1094.5, Civil Code of Procedure" (sic) (Code of Civil Procedure). Appellant refused to amend and its complaint was dismissed. We affirm.

DISCUSSION:

Relying on Southern Cal. Acoustics Co. v. C. V. Holder, Inc. (1969) 71 Cal.2d 719, 79 Cal.Rptr. 319, 456 P.2d 975, appellant seeks to state a cause of action for breach of "statutory duty." The statute involved is Government Code sections 4100 et seq., the "Subletting and Subcontracting Fair Practices Act." That act relates to the use of subcontractors on public construction. Section 4107 of the act provides that:

"No prime contractor whose bid is accepted shall:

"(a) Substitute any person as subcontractor in place of the subcontractor listed in the original bid, except that the awarding authority, or its duly authorized officer, may, except as otherwise provided in Section 4107.5, consent to the substitution of another person as a subcontractor:

"(1) When the subcontractor listed in the bid after having had a reasonable opportunity to do so fails or refuses to execute a written contract, when such written contract, based upon the general terms, conditions, plans and specifications for the project involved or the terms of such subcontractor's written bid, is presented to him by the prime contractor....

Southern Cal. Acoustics Co. v. C. V. Holder, Inc., supra, 71 Cal.2d 719, 79 Cal.Rptr. 319, 456 P.2d 975, expressly held that merely listing the name of a subcontractor does not create a contract, express or implied, between the prime contractor and the subcontractor. But such listing, said the court, creates a "statutory duty." This duty imposes on the prime contractor a peculiar liability to the subcontractor. If the named subcontractor is unlawfully removed or substituted for a reason not authorized by the statute, such removal permits the subcontractor to maintain a cause of action against the prime contractor. But Southern Cal. Acoustics Co., supra, is factually distinguishable from the case at bench and is unavailable to appellant as support or authority upon which appellant may base any cause of action.

In Southern Cal. Acoustics Co., plaintiff subcontractor submitted a bid to defendant-prime contractor. After being awarded the contract, defendant found that plaintiff's name was mistakenly listed. Defendant requested and received permission from the public agency to substitute another subcontractor who was intended. The defendant was nonetheless held liable to the plaintiff for breach of the statutory duty because the substitution was for a reason not recognized by the statute. The court supported its holding by declaring that the purpose of the law went beyond the declarations of Government Code section 4101 ² and was intended also to protect subcontractors from being wrongfully removed. Thus the court recognized an enforceable "statutory duty" on the part of the prime contractor in favor of the subcontractor.

By contrast, at bench, appellant did not specifically allege that the substitution was wrong or unlawful, or that the permission given by Hospital was wrong or unlawful. Neither did appellant allege any fact which disclosed or, under the most generous interpretation possible, implied that the substitution was unlawful or wrong. As indicated earlier, appellant alleged in conclusionary terms only that respondent "has wrongfully refused to permit" appellant to perform the subcontract work; and that appellant "lost the benefit it would have realized had it not been wrongfully deprived of the subcontract." These are but legal conclusions which the trial court was authorized to ignore. conclusionary allegations without facts to support them are ambiguous and may be disregarded. (Ankeny v. Lockheed Missiles & Space Co. (1979) 88 Cal.App.3d 531, 151 Cal.Rptr. 828.)

More importantly, appellant's first amended complaint not only omits necessary allegations, but affirmatively discloses lawful substitution and at least one factual ground which permits substitution. Even if it were not clearly implicit or affirmatively disclosed in the first amended complaint, appellant has conceded on appeal that such permission was given. This fact no doubt accounts for the fact that appellant did not further amend its complaint although given leave to do so. Appellant could not truthfully allege lack of permission.

In addition to the presence of the permission by the administrative authority, Hospital, the content of the pleading discloses a fact on which permission may be given by the administrative authority, i. e. failure to sign a subcontract. Although not containing the terms of appellant-subcontractor's bid, the written contract submitted to appellant was "based upon the general terms, conditions, plans and specifications for the project involved" and which respondent used in its bid on the prime contract. Failure to sign such a contract when tendered is ground on which the public agency may give permission to substitute. (§ 4107, subd. (a)(1).)

At bench, under the same statute, Hospital had the initial jurisdiction and authority to decide whether the facts warranted granting respondent permission to substitute. There was no challenge or effort to review that permission. As a result, the trial court was entitled to presume that Hospital obeyed the law and performed its legal duty. The unavoidable conclusion is that Hospital properly decided that appellant's refusal to sign was without justification. Accordingly, appellant falls within section 4107, subdivision (a)(1), and may not maintain an action against the prime contractor. The same statute on which appellant relies specifically provides respondent a defense to appellant's claim. Apart from this statute, there is no contractual, tort or other legal duty or liability, common law or otherwise. (Accord Southern Cal. Acoustics Co., supra, 71 Cal.2d 719, 79 Cal.Rptr. 319, 456 P.2d 975; W. J. Lewis Corp. v. C. Harper Construction Co. (1981) 116 Cal.App.3d 27, 171 Cal.Rptr. 806; C. L. Smith Co. v. Roger Ducharme, Inc. (1977) 65 Cal.App.3d 735, 135 Cal.Rptr. 483.)

Any other result would be contrary to the express holding of Southern Cal. Acoustics Co. v. C. V. Holder, Inc., supra, 71 Cal.2d 719, 79 Cal.Rptr. 319, 456 P.2d 975, that the mere listing of a subcontractor's name by the prime contractor in its bid to the public agency does not create a contract between the subcontractor and the prime contractor nor does it create any other common law right to maintain an action against the prime contractor. The "duty" created is, in the language of Southern Cal. Acoustics Co., purely a statutory one.

Since Hospital lawfully decided that there was reason for substitution, it would render meaningless the statutory scheme to allow a subcontractor to nonetheless maintain an action such as appellant claims here. Appellant contends at bench that it has some "parallel" common law right to maintain a separate action. Appellant is mistaken. First, the precise nature of this common law action is not disclosed. Moreover, appellant categorically...