Swinerton & Walberg Co. v. City of Inglewood-L.A. County Civic Center Authority

• Decision Date: 26 June 1974
• Docket Number: INGLEWOOD--LOS
• Parties: SWINERTON & WALBERG CO., a corporation, Plaintiff, Cross-Defendant and Respondent, v. CITY OFANGELES COUNTY CIVIC CENTER AUTHORITY and City of Inglewood, Defendants, Cross-Complainants, Cross-Defendants and Respondents, Argo Construction Co., Inc., a corporation, Cross-Defendant, Cross-Complainant and Appellant. Civ. 42525.
• Court: California Court of Appeals Court of Appeals

Page 834

114 Cal.Rptr. 834

40 Cal.App.3d 98

SWINERTON & WALBERG CO., a corporation, Plaintiff, Cross-Defendant and Respondent, v. CITY OF INGLEWOOD--LOS ANGELES COUNTY CIVIC CENTER AUTHORITY and City of Inglewood, Defendants, Cross-Complainants, Cross-Defendants and Respondents Argo Construction Co., Inc., a corporation, Cross-Defendant, Cross-Complainant and Appellant.

Civ. 42525.

Court of Appeal, Second District, Division 3, California.

June 26, 1974.

Shapiro & Maguire Law Corp., Everett W. Maguire and Anthony Saul Alperin, Beverly Hills, for appellant.

Stephens, Jones, La Fever & Smith, R. Wicks Stephens, II, and Lawrence D. Lewis, Los Angeles for respondent Swinerton & Walberg Co.

Donald E. Olson, City Atty., and Mark L. Dees, Asst. City Atty., for respondents City of Inglewood-Los Angeles County Civic Center Authority and City of Inglewood.

COBEY, Associate Justice.

Cross-complainant, Argo Construction Co., Inc. (Argo), appeals from a judgment (Code Civ.Proc., § 581d) dismissing pursuant to Code of Civil Procedure section 581, subdivision (3), Argo's cross-action against cross-defendants, City of Inglewood-Los Angeles County Civic Center Authority (Authority), City of Inglewood (City), County of Los Angeles (County), and Swinerton & Walberg Co. (Swinerton). The dismissal of Argo's cross-action followed the sustaining, without leave to amend, of the general demurrers of the Authority, the City, and Swinerton to Argo's cross-complaint and answer, the striking of these pleadings and the entry of Argo's default as to the Authority and the City's cross-complaint. ¹

Argo, the lowest monetary bidder on a public works contract awarded by the Authority, in its cross-complaint against the Authority, the City, the County and Swinerton, the second lowest monetary bidder and the recipient of the contract, alleged against the public entities three causes of action--the first in tort for breach of statutory duty, the second in contract (promissory estoppel) and the third of declaratory relief. The last cause of action was pled against Swinerton as well.

We shall now consider whether Argo stated in this pleading acts sufficient to constitute any of the foregoing causes of action it alleged.

The First Cause of Action--Tort

The first question posed is whether the misaward by a public entity (the Authority) of a public works contract to one (Swinerton) other than the lowest responsible bidder (Argo) gives to the latter a cause of action in tort for monetary damages against the public entity. ² This precise question has been answered in the negative by the Third District of this statewide court less than four years ago in Rubino v. Lolli, 10 Cal.App.3d 1059, 89 Cal.Rptr. 320. That decision, of course, is not binding upon us. (See Danley v. Superior Court, 64 Cal.App. 594, 599, 222 P. 362; 6 Witkin, Pt. I, Cal.Procedure (2d ed. 1971) Appeal, § 667, p. 4580.) But we find its rationale quite persuasive. There the court pointed out that competitive bidding requirements appear to have been imposed solely for the benefit and protection of the public rather than for the benefit of the bidders. (Rubino, 10 Cal.App.3d p. 1062, 89 Cal.Rptr. 320.) The court consequently held that the misaward of a public works contract to one other than the lowest responsible bidder constitutes only an abuse of discretion by the awarding entity in determining the identity of such bidder and therefore the making of the misaward comes within the discretionary immunity to tort liability established by sections 815, 815.2, subdivision (b), and 820.2. (id., pp. 1063--1064.) thus, in rubino recovery of monetary damages in tort by the lowest responsible bidder was denied on the basis of discretionary immunity.

Argo urges us not to follow Rubino, ³ but instead to follow, in part at least, Southern Cal. Acoustics Co. v. C.V. Holder, Inc., 71 Cal.2d 719, 79 Cal.Rptr. 319, 456 P.2d 975, where our Supreme Court held that a listed subcontractor may enforce his statutory right under section 4107 to perform the subcontract by an action for monetary damages against the prime contractor to recover the benefit of the bargain the listed subcontractor would have realized if he had not been wrongfully deprived of the subcontract. (id., p. 727, 79 cal.rptr. 319, 456 P.2d 975.) in this case our supreme court determined that the purpose of the basic statute involved (Subletting and Subcontracting Fair Practices Act) was to protect both the public and subcontractors from the proscribed evils of unfair bid peddling and bid shopping. (Id.) Its basis for so determining was the just-stated title of the statute and section 4101, which has always read, since its enactment in 1963, as follows: 'The Legislature finds that 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 the full benefits of fair competition among prime contractors and subcontractors, and lead to insolvencies, loss of wages to employees, and other evils.'

We have no quarrel with this determination, but in our view, it has no application to the competitive bidding requirements involved in this case. There is nothing in these requirements, as there was in the construction industry's Fair Practices Act just quoted, to lead one to infer reasonably that competitive bidding requirements were imposed for the benefit of the bidders as well as for the benefit of the public. Finally, we note that the Rubino court was not unaware of the Southern Cal. Acoustics Co. decision. ⁴ (Rubino, supra, 10 Cal.App.3d p. 1064, 89 Cal.Rptr. 320.)

Accordingly, we hold that Argo did not State facts in its cross-complaint sufficient to constitute a cause of action in tort for breach of a statutory duty against the Authority, the City and the County.

The Second Cause of Action--Contract

Generally speaking, there are three types of relief available to one who has been damaged--preventive, specific and monetary. Argo in the prior litigation obtained preventive relief. As pointed out in the cases cited in Rubino 10 Cal.App.3d at 1062, 89 Cal.Rptr. 320, specific relief has been held to be unavailable to one in Argo's position because of the privilege (as here) of the public entity to reject all bids. In any event, in this case it is now too late for such relief to be effective. This leaves only monetary relief and we have just held that Argo may not have monetary relief in tort.

Therefore, the second question we must answer is whether Argo may recover such monetary relief in contract from the Authority, the City, and the County. It seeks monetary damages of approximately $141,500, consisting largely in (a) the expenses it incurred in its unsuccessful participation in the competitive bidding process, (b) the monies it expended in its successful aforementioned prior litigation to set aside the award of the contract to Swinerton, and (c) in the profits, etc. it allegedly lost by reason of its failure to obtain the award of the contract.

The cause of action in promissory estoppel ⁵ alleged is apparently based on section 814 ⁶ and Restatement of Contracts, section 90. ⁷ If the requirements of the Restatement section have been met in the instant case, an informal contract (requiring neither assent nor consideration) between the Authority and Argo to award the public works contract to Argo as 'the lowest responsible bidder' resulted (Rest., Contracts (1932) § 85) ⁸ and Argo became entitled at least in some part to the damages that ensued from the Authority's breach of this informal contract. (See Drennan v. Star Paving Co., 51 Cal.2d 409 413, 333 P.2d 757.) Clearly, the Authority promised in its solicitation of bids to award the contract to the lowest responsible bidder and Argo's reasonable and detrimental reliance upon this promise brings section 90 into play unless the final clause of the section prevents this result.

In this connection Restatement section 90 provides that a promise, meeting its other requirements is binding 'if injustice can be avoided only by enforcement of the promise.' The public entities contend that such a cause of action against them cannot be recognized in Argo in view of our conclusion that the competitive bidding requirements on contracts for public works exist to protect the public rather than the bidders. They point out (as we indicated earlier) that Argo could not have compelled the Authority to award the contract to it because of the provision in the notice soliciting bids that any and all bids might be rejected. (See Rubino v. Lolli, Supra, 10 Cal.App.3d 1059, 1062, 89 Cal.Rptr. 320, and cases there cited.) To them the preventive relief that Argo obtained in the prior litigation was granted to protect the public interest and not that of Argo.

We disagree. It seems to us that injustice to Argo, the promisee, can be avoided only by at least the partial enforcement of the Authority's promise to it to award the contract to it as the lowest responsible bidder. As we have already stated earlier, Argo's reliance upon this promise was both reasonable and detrimental to it. To hold that Argo was not entitled to rely upon this promise because of the just-mentioned reservation of the right to reject any and all bids would make the Authority's promise an illusory one and render the whole competitive bidding process nugatory. In contract law generally monetary damages for breach of contract may be awarded where specific relief is unavailable because of the discretionary nature of the latter relief. (See Rest., Contracts, Supra, § 358 et seq.) The public obviously has both an economic and a moral interest in public works contracts being awarded to the lowest responsible bidders. An award of monetary damages to the lowest responsible bidder for the misaward of a public works contract would be in the public interest...