Los Angeles Unified School District v. Great American Insurance

The question presented is whether a public entity can be liable on a breach of warranty claim based on an unintentional misrepresentation or nondisclosure of material facts. The majority holds that, generally, a public entity may be liable “if it knew, but failed to disclose, material facts that would affect the contractor’s bid or performance.” (Maj. opn., ante, at p. 745.) The majority then sets forth a four-part test to make this determination modeled after the federal “superior knowledge doctrine.” (Id. at pp. 753-754.) I believe the majority’s holding is contrary to existing precedent.

In Souza & McCue Constr. Co. v. Superior Court (1962) 57 Cal.2d 508, 510 [ 20 Cal.Rptr. 634 , 370 P.2d 338 ], we said, “A contractor of public works who, acting reasonably, is misled by incorrect plans and specifications issued by the public authorities as the basis for bids and who, as a result, submits a bid which is lower than he would have otherwise made may recover in a contract action for extra work or expenses necessitated by the conditions being other than as represented.” (Italics added.) “This rule is mainly based on the theory that the furnishing of misleading plans and…

We have long recognized that "[a] contractor of public works who, acting reasonably, is misled by incorrect plans and specifications issued by the public authorities as the basis for bids and who, as a result, submits a bid which is lower than he would have otherwise made may recover in a contract action for extra work or expenses necessitated by the conditions being other than as represented." ( Souza & McCue Constr. Co. v. Superior Court (1962) 57 Cal.2d 508, 510 [ 20 Cal.Rptr. 634 , 370 P.2d 338 ].) In this case we decide whether a contractor may also recover when the plans and specifications are correct, but the public authority failed to disclose information in its possession that materially affected the cost of performance. The question has divided the Courts of Appeal.

One Court of Appeal, followed here by the trial court, held that to recover for nondisclosure, the contractor must show the public entity affirmatively misrepresented or intentionally concealed material facts that rendered the furnished information misleading. ( Jasper Construction, Inc. v. Foothill Junior College Dist. (1979) 91 Cal.App.3d 1, 10-11 [ 153 Cal.Rptr. 767 ].) Another Court of…

We have long recognized that “[a] contractor of public works who, acting reasonably, is misled by incorrect plans and specifications issued by the public authorities as the basis for bids and who, as a result, submits a bid which is lower than he would have otherwise made may recover in a contract action for extra work or expenses necessitated by the conditions being other than as represented.” (Souza & McCue Constr. Co. v. Superior Court (1962) 57 Cal.2d 508, 510 [ 20 Cal.Rptr. 634 , 370 P.2d 338 ].) In this case we decide whether a contractor may also recover when the plans and specifications are correct, but the public authority failed to disclose information in its possession that materially affected the cost of performance. The question has divided the Courts of Appeal.

One Court of Appeal, followed here by the trial court, has held that to recover for nondisclosure, the contractor must show the public entity affirmatively *745 misrepresented or intentionally concealed material facts that rendered the furnished information misleading. (Jasper Construction, Inc. v. Foothill Junior College Dist. (1979) 91 Cd.App.3d 1, 10-11 [ 153 Cal.Rptr. 767 ].) Another Court of…