Southern California Acoustics Co. v. C. V. Holder, Inc.

• Decision Date: 02 August 1968
• Citation: 70 Cal.Rptr. 809
• Parties: SOUTHERN CALIFORNIA ACOUSTICL CO., Inc., Plaintiff and Appellant, v. C. V. HOLDER, INC., and Los Angeles Unified School District of Los Angeles County, Defendants and Respondents. Civ. 31790.
• Court: California Court of Appeals Court of Appeals

Page 809

70 Cal.Rptr. 809

SOUTHERN CALIFORNIA ACOUSTICL CO., Inc., Plaintiff and Appellant, v. C. V. HOLDER, INC., and Los Angeles Unified School District of Los Angeles County, Defendants and Respondents.

Civ. 31790.

Court of Appeal, Second District, Division 4, California.

Aug. 2, 1968.

For Opinion on Hearing, see 79 Cal.Rptr. 319, 456 P.2d 995.

Munns & Kofford and Milton J. Morris, San Marino, for plaintiff and appellant.

Grant & Popovich and Irvin Grant, Beverly Hills, for defendants and respondents.

JEFFERSON, Associate Justice.

The plaintiff corporation appeals from a judgment of dismissal entered after a demurrer to its second amended complaint was sustained without leave to amend.

The complaint contains three asserted causes of action. The first cause of action alleges the following facts: Plaintiff, a licensed subcontractor, on November 24, 1965, submitted a bid by telephone to defendant C. V. Holder, Inc., a general contractor, for subcontract work installing acoustical tile on a public school construction job which C. V. Holder was preparing to bid on. After receiving plaintiff's bid, on the same date C. V. Holder submitted a bid to defendant Los Angeles Unified School District for the prime contract to do the job. In its bid C. V. Holder listed plaintiff as one of its subcontractors. C. V. Holder was subsequently awarded the prime contract. The fact that the contract had been awarded to C. V. Holder was published in a local trade newspaper along with the names of the subcontractors listed in C. V. Holder's successful bid. Plaintiff's name was included. The newspaper has a wide distribution among subcontractors. C. V. Holder knew when it submitted its bid that, if it was accepted, plaintiff's name would be published in the newspaper and plaintiff would be informed of that fact. Plaintiff became aware from the newspaper that C. V. Holder had been awarded the contract and that it was listed as a subcontractor. Plaintiff refrained from bidding on other construction projects to remain within its bonding limits, and held itself in readiness to perform its contract believing that C. V. Holder had accepted its bid. C. V. Holder failed to notify plaintiff that plaintiff's bid had not been accepted. C. V. Holder should have foreseen that plaintiff, after seeing its name listed as a subcontractor, would change its position believing its bid had been accepted. In the latter part of December 1965 or early in January 1966, C. V. Holder breached its contract with plaintiff by causing the School District to substitute another subcontractor to perform the work plaintiff was to perform.

In the second stated cause of action plaintiff alleges that it sustained damages as the result of C. V. Holder's negligence in listing plaintiff's name as a subcontractor in the bid for the prime contract.

For a third cause of action plaintiff alleges that it is a third party beneficiary of the prime contract.

A general demurrer is properly sustained where no cause of action at all is shown by the complaint. (County of Los Angeles v. Read, 193 Cal.App.2d 748, 751, 14 Cal.Rptr. 628.) It is properly sustained without leave to amend when it is apparent that the complaint cannot be amended to state a cause of action. (Marin v. Jacuzzi, 224 Cal.App.2d 549, 552, 36 Cal.Rptr. 880.)

With respect to the first stated cause of action of plaintiff's complaint, two theories are advanced in support of the claim that it alleges a cause of action against C. V. Holder based on contract. The first theory is that C. V. Holder manifested an acceptance of plaintiff's bid by listing plaintiff as a subcontractor in the bid for the prime contract with the knowledge that plaintiff would be informed of such listing through the trade newspaper. Plaintiff asserts that the act of the general contractor in listing the name of a subcontractor in its bid to the building agency, is commonly regarded in the trade as constituting an acceptance of the bid of the subcontractor, conditioned only on the acceptance of the general contractor's bid by the building agency. Plaintiff's second approach is that C. V. Holder is estopped to deny the existence of the subcontract because C. V. Holder set in motion a set of circumstances which led plaintiff to reasonably believe an acceptance had taken place; that, under the circumstances, C. V. Holder was under a duty to notify plaintiff that the bid was rejected. We conclude that neither theory finds support in the law, and that plaintiff has not alleged a cause of action against C. V. Holder.

At the outset, it must be recognized that plaintiff's name was listed as a subcontractor in C. V. Holder's bid for the prime contract, because a statute requires that the general contractor's bid include the names of subcontractors who are to perform one-half of one percent or more of the construction work. (Gov.Code § 4104.) The statute confers no special rights on the subcontractors listed, its purpose being aimed at protecting the public and the awarding authority. (Klose v. Sequoia Union High School Dist., 118 Cal.App.2d 636, 641, 258 P.2d 515.)

Contrary to the urging of plaintiff, it is well established that a subcontractor's bid does not become binding merely upon the awarding of the construction contract to the general contractor in the absence of an express agreement to that effect. (Klose v. Sequoia Union High School Dist., supra, 118 Cal.App.2d 636, 640-641, 258 P.2d 515; Norcross v. Winters, 209 Cal.App.2d 207, 217, 25 Cal.Rptr. 821; Western Concrete Structures Co. v. James I. Barnes Constr. Co., 206 Cal.App.2d 1, 13, 23 Cal.Rptr. 506; Neptune Gunite Co. v. Monroe Enterprises, Inc., 229 Cal.App.2d 439, 445-446, 40 Cal.Rptr. 367.)

Quoting from Klose v. Sequoia Union High School Dist., supra, (118 Cal.App.2d at pp. 640-641, 258 P.2d at p. 517):

'Petitioner's arguments are necessarily predicated upon the concept that a subcontractor, whose name is submitted with the bid of the general contractor, in some undefined way, secures some legal rights when the general contractor's bid is accepted by the awarding authority. In the absence of statute that is not the law. A subcontractor bidder merely makes an offer that is converted into a contract...