McGee v. Balfour Beatty Constr.
Annotate this CaseEducation Code section 17406 governs lease-leaseback construction agreements. Plaintiffs filed suit alleging that the lease-leaseback agreements entered into by defendants were a sham to avoid the competitive bid process and are therefore void. The court concluded that the trial court properly sustained the demurrer to all causes of action alleging the district was required to obtain competitive bids where competitive bids were not required under section 17406. The court also concluded that the trial court should have overruled the demurrer to the conflict of interest cause of action for violation of Government Code section 1090 where, at this early stage in the proceedings, section 1090 may apply. The court rejected defendants' arguments that plaintiffs lack standing to raise the issue and that section 1090 always excludes all independent contractors. Finally, the court concluded that the sanctions against plaintiffs' attorney must be reversed because the litigation is not frivolous. Accordingly, the court reversed in part and affirmed in part.
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