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Unite Here Local 30 et al v. Department of Parks and Recreation et al

April 29, 2011

UNITE HERE LOCAL 30 ET AL., PLAINTIFFS AND APPELLANTS,
v.
DEPARTMENT OF PARKS AND RECREATION ET AL., DEFENDANTS AND RESPONDENTS; DELAWARE NORTH COMPANIES PARKS & RESORTS AT SAN DIEGO, LLC, ET AL., REAL PARTIES IN INTEREST AND RESPONDENTS.



(Super. Ct. No. 34200980000192CUWMGDS) APPEAL from a judgment of the Superior Court of Sacramento County, Timothy M. Frawley, Judge. Affirmed.

The opinion of the court was delivered by: Hull ,j.

CERTIFIED FOR PUBLICATION

In 2004, following a competitive bidding process, defendant California Department of Parks and Recreation (DPR) awarded real parties in interest Delaware North Companies Parks & Resorts, Inc. (DNCPR), and Delaware North Companies Parks & Resorts at San Diego (DNCPRSD) (hereafter collectively Delaware North) a contract to operate a concession at the Old Town San Diego State Historic Park for a period of 10 years (the Concession Contract). However, after only four years, DPR approved Delaware North's assignment of the Concession Contract to real party in interest Old Town Family Hospitality Corp. (OTFHC) for the remainder of the contract term.

As a result of the assignment, many of Delaware North's employees who had worked on the concession, some of whom were represented by plaintiff Unite Here Local 30 (Local 30), were terminated and not rehired by OTFHC, and Local 30 ceased to represent the employees working on the concession.

Local 30 and plaintiff Bridgette Browning, a California resident and taxpayer, brought this action against DPR seeking to overturn the assignment. Plaintiffs alleged the assignment violated both the competitive bidding provisions of the Public Resources Code and an assignment clause in the Concession Contract.

The trial court sustained a demurrer to the contract claim based on lack of standing. The court thereafter rejected the Public Resources Code claim, concluding the assignment did not cause a material change in the terms of the Concession Contract and, therefore, was not subject to competitive bidding requirements.

Plaintiffs appeal the ensuing judgment against them. We conclude the trial court correctly rejected plaintiffs' claims and affirm the judgment.

Facts and Proceedings

The facts of this matter are generally undisputed. From July 1971 through May 2005, the concession at issue in this matter, located at the Old Town San Diego Historic Park (the Old Town concession), was operated by Bazaar Del Mundo (BDM). The latest concession contract with BDM was scheduled to expire in December 2003.

In March 2003, DPR issued a request for proposals (RFP) for a new contract to operate the Old Town concession. Bids were submitted by DNCPR, BDM, and others.

DPR eventually awarded the contract to DNCPR. DNCPR thereafter formed DNCPRSD to operate the concession. On December 14, 2004, in accordance with the bid criteria set forth in the RFP and following a bid protest by BDM, DPR and Delaware North entered into the Concession Contract. Paragraph 37(a) of the contract limits assignments and sub-concessions. It reads:

"No transfer, assignment, or corporate sale or merger by the Concessionaire that affects this contract or any part thereof or interest therein, directly or indirectly, voluntarily or involuntarily, shall be made unless such transfer, assignment, or corporate merger or sale is first consented to in writing by State. Before State considers such assignment, evidence must be given to the State that the proposed assignee qualifies as a 'best responsible bidder' under the terms of Section 5080.05 of the Public Resources Code or 'best responsible person or entity submitting a proposal' under the terms of Section 5080.23 of the Public Resources Code and the Bid Prospectus or Request for Proposals under which this contract was awarded and executed. Any such assignment, to be effective, must comply with applicable law, including, without limitation on generality, Public Resources Code Sections 5080.20 and 5080.23."

During the latter part of 2008, Delaware North requested permission to assign the Concession Contract to OTFHC and submitted evidence of OTFHC's qualifications and evidence that OTFHC would operate the concession consistent with the terms of the Concession Contract. DPR requested Delaware North to contact the original bidders from 2003-2004 to determine if any would be interested in assuming the Concession Contract. Delaware North did so, but none of the original bidders expressed such an interest.

DPR reviewed the evidence submitted by Delaware North and determined that the proposed assignment would not effect any material changes in the Concession Contract and that OTFHC met the requirements of a qualified assignee under paragraph 37(a).

On December 24, 2008, DPR approved the proposed assignment and entered into an amendment to the Concession Contract, subject to approval by the Attorney General and the Department of General Services. Such approval came on January 16, 2009. OTFHC took over the Old Town concession in May 2009.

In March 2009, plaintiffs filed this action against DPR, naming as real parties in interest Delaware North and OTFHC. The amended petition contained three causes of action: (1) breach of contract; (2) violation of the competitive bidding provisions of the Public Resources Code; and (3) violation of Government Code section 6253, subdivision (c), on the disclosure of public records.

Delaware North and OTFHC demurred to the amended petition. The trial court sustained the demurrer to the breach of contract claim without leave to amend, concluding plaintiffs lack standing to assert such a claim. The court overruled the remaining demurrers.

Plaintiffs dismissed their public records claim and the matter was submitted to the court on the Public Resources Code claim alone. The trial court concluded DPR's consent to the assignment did not violate the Public Resources Code. The court concluded the findings by DPR that OTFHC is a best responsible bidder and that the assignment would not materially change the terms and conditions of the Concession Contract are supported by the evidence. The court further concluded the assignment of a competitively bid contract need not itself be competitively bid when, as here, there is no material change in the terms of the contract. The court denied the petition and entered judgment against plaintiffs.

Discussion

I Competitive Bidding Requirements

Division 5, chapter 1.2, article 1 of the Public Resources Code (Pub. Res. Code, § 5080.02 et seq.; hereafter Article 1) sets forth requirements for awarding concession contracts in the state park system. (Undesignated statutory references that follow are to the Public Resources Code.) Section 5080.03 permits DPR to enter into contracts "for the construction, maintenance, and operation of concessions within units of the state park system." (§ 5080.03, subd. (a).) Except as otherwise specified, "all contracts authorizing occupancy of any portion of the state park system for a period of more than two years shall be awarded to the best responsible bidder." (§ 5080.05.) Best responsible bidder is defined in Article 1 as the bidder who "will operate the concession (1) consistent with the contract, (2) in a manner fully compatible with, and complimentary to, the characteristics, features, and theme of the unit in which the concession will be operated, and (3) in the best interests of the state and public." (§ 5080.05.)

As part of the bid process, DPR must "prepare an invitation to bid, which shall include a summary of the terms and conditions of the concession sufficient to enable persons to bid solely on the basis of rates to be paid to the state." (§ 5080.06.) Notice must be given to the public (§ 5080.07) and bids are to be submitted under seal (§ 5080.09). Every contract awarded must be ...


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