State ex rel. Standard Elevator Co. v. West Bay Builders, Inc.

A general contractor removed a subcontractor from a public works project when it learned the subcontractor was unlicensed, lied about its references, and could not secure bonds for its work. The general contractor substituted other subcontractors to complete the project. The general contractor sued the subcontractor to recover as damages the amount paid to complete the work above the amount bid by the unlicensed subcontractor. The subcontractor cross-complained upon allegations that it and other subcontractors were substituted in violation of the Public Contract Code, which sets forth requirements for the substitution of subcontractors on a public works project. The court found the subcontractor liable for fraud in its bid submission and rejected claims of improper substitution of subcontractors. The general contractor was awarded damages.

*968 The subcontractor then filed this lawsuit against the general contractor under California’s False Claims Act (Gov. Code, § 12650 et seq.) (CFCA) upon allegations that the general contractor violated the Public Contract Code in substituting subcontractors and that those violations rendered false the general contractor’s…