Hensel Phelps Construction Co. v. Department of Corrections and RehabilitationAnnotate this Case
After Phelps was awarded a public works contract by the CDCR, another bidder successfully challenged the award, obtaining a ruling in a San Diego trial court that Phelps's bid was "non-responsive as a matter of law" due to its inclusion of "non-waivable mathematical/typographical errors." Phelps then filed suit against CDCR, seeking to recover the costs it expended on the project. The trial court held that the San Diego trial court's ruling was itself the result of a defect in the competitive bidding process caused solely by CDCR, and entered judgment in favor of Phelps.
The Court of Appeal reversed, holding that judgment on the pleadings should have been granted. The court held that the language in Public Contract Code section 5110 provides that the parties to a challenged public contract may enter into that contract pending final resolution of the challenge, but if the challenge is resolved by invalidation because the public entity was at fault, the contractor may recover. Applying section 5110 in this case, the court held that the contract was invalidated for a material error in Phelps's bid, not for any defect in the competitive bidding process, much less a defect caused solely by CDCR. Therefore, section 5110 could not provide a basis for recovery. The court held that application of the doctrine of collateral estoppel would produce the same result, and rejected Phelps's late-raised alternative ground. However, the court affirmed the trial court's denial of recovery on CDCR's cross-complaint for disgorgement.