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Bay Cities Paving & Grading, Inc. v. City of San Leandro

California Court of Appeals, First District, Second Division

January 28, 2014

BAY CITIES PAVING & GRADING, INC., Plaintiff and Appellant,
v.
CITY OF SAN LEANDRO, Defendant and Respondent, OLIVER DESILVA, INC., Real Party in Interest, and Respondent.

Order Field 2/13/14

Superior Court of Alameda County No. RG12657020 Hon. Evelio Grillo

Attorneys for Plaintiff and Appellant Bay Cities Paving & Grading Inc. Chris Andrew McCandless Diepenbrock Elkin

Attorneys for Defendant and Respondent City of San Leandro Benjamin T. Reyes, III Meyers Nave Riback Silver & Wilson

Attorneys for Real Party in Interest And Respondent Oliver Desilva Inc. William Eric Blumhardt Archer Norris

Attorneys for Amicus Curiae for Respondent League of California Cities Clare Marie Gibson Jarvis, Fay, Doporto & Gibson

Haerle, J.

I. INTRODUCTION

Appellant Bay Cities Paving & Grading, Inc. (hereafter appellant or Bay Cities) appeals from an order and judgment denying its petition for a writ of mandate. Pursuant to that petition, Bay Cities challenged the action of the City of San Leandro (hereafter City) in awarding a public works contract to a competing contractor, real party in interest and respondent Oliver DeSilva, Inc., dba Gallagher & Burk (hereafter G&B), the lowest bidder on the project. Bay Cities, the second lowest bidder, alleged that the City could not properly award the contract to G&B because a missing page in G&B’s bid was a material deviation from the contract specifications. We reject this contention and therefore affirm the judgment.

II. FACTUAL AND PROCEDURAL BACKGROUND

On September 4, 2012, [1] the City approved plans and specifications for the construction of a “BART-Downtown Pedestrian Interface Project along San Leandro Boulevard” and called for bids on that project. Prospective bidders were notified of the project requirements which included submitting a proposal, and using a standard form provided by the City, along with a bid deposit securing the bidder’s proposal. This security could be in the form of cash, a cashier’s or certified check or a bidder’s bond executed by an authorized surety company.

The City provided prospective bidders with a “Contract Book” for the project which contained, among other things, copies of the required proposal form and of the City’s standard form of bid bond. (JA 141) The proposal form stated that the “completed proposal form shall be submitted in its entirety, ” and “shall be accompanied by a bidder’s bond executed by an admitted surety insurer, naming the City of San Leandro as beneficiary.... [¶]... The form of Bidder’s Bond to be used [is] included with the proposal form.”[2]

On October 23, the City opened the bids it had received for this project. All of the bidders submitted bid bonds as security for their bids. The lowest bid on the contract was submitted by G&B in the amount of $4, 846, 700. Bay Cities submitted the second lowest bid in the amount of $5, 359, 725, i.e., over $500, 000 more than the G&B bid.

However, the bid package that G&B had submitted was missing page 33, which was the first page of its bid bond. G&B’s bid package did include the second page of the bond (page 34 of the entire bid), which contained the signatures of both the surety’s attorney-in-fact and G&B’s president, as well as notary certificates for both signatures. On October 23, G&B submitted the first page of its bid bond to the City, albeit after the sealed bids had been opened.

On October 26, Bay Cities filed a bid protest with the City; it argued that G&B’s bid was “nonresponsive and must be rejected” because of the omitted page of G&B’s bid bond. On October 30, G&B’s attorney wrote the City, stating that his client’s initial failure to include the first page of the two-page bid bond “was due to an inadvertent error, ” and continued by noting that the City “may waive this irregularity and award the contract to G&B” because “the irregularity is minor and waivable by the City....” That letter continued by citing legal authorities G&B’s counsel contended supported that position.

In an October 31 letter, City engineer Mark Goralka acknowledged receipt of Bay Cities’ bid protest but notified it that the City had determined that G&B’s bid was accompanied by an enforceable bond and that the omission of the cover page of the two-page bid bond “can be waived as an inconsequential bid defect.” Goralka also advised that the City would proceed with awarding the contract to G&B.

On November 19, the City received a letter from G&B’s bid bond surety, Travelers Casualty and Surety Company, confirming that the bid bond it had issued in connection with the project “was approved and authorized by” it, and that the omission of the first page of the bond from G&B’s bid package “did not affect our commitment under the bid bond.”

That same day, the City Council of San Leandro unanimously adopted a resolution which identified G&B’s bid as the lowest responsible bid for the project, rejected all other proposals or bids, waived “any irregularities in the proposal or bid of” G&B, and awarded the contract for the project “to the lowest responsible bidder therefore, to wit, [G&B]....” The November 19 resolution also established that if G&B was unable to execute the contract for this project, the City Manager was authorized to award the project to the next lowest responsible bidder and to “take all actions necessary to recover any bid security from the low bidder necessary to make the City whole in its acceptance of the lowest bid.”

The following day, November 20, appellant filed a petition for a writ of mandate and a complaint in the Alameda County Superior Court. It also filed an Ex Parte Application for a Temporary Restraining Order contesting the City’s award of the contract to G&B. The trial court conducted a hearing on that application on November 26; two days later it denied appellant’s request for a temporary restraining order.

On January 16, 2013, that court held a hearing on appellant’s petition for a writ of mandate and, a week later, denied it. In its January 23, 2013, order, the trial court stated: “The City of San Leandro put out a project to bid and all prospective bidders were required to submit a bid bond with their bids. The City provided all prospective bidders with a form Bid Bond. Gallagher & Burk submitted a bid that failed to include page 33 (the terms of the form bid bond) but included page 34 (the signature page for the bid bond). The City staff concluded that the bid bond was enforceable (Letter of 10/31/12) and the City Council formally waived the irregularity and accepted the bid (Resolution dated 11/19/12.) [¶] The court finds substantial evidence to support the City’s decision that Gallagher & Burk’s failure to submit page 33 with its bid package was a ‘minor irregularity’ not affecting the amount of the bid that did not give Gallagher & Burk an advantage or benefit not allowed to other bidders. (Notice to Bidders, para 10, 27.) The bid bond was a form document so that it was apparent that the signature page 34 referred to the prior text [on] page 33. In addition the signature page independently identified the project at issue. The City reasonably concluded that a court would read page 34 in the context of the form bid bond and enforce the bid bond. (Civil Code 1647.)”

On January 23, 2013, the trial court filed a judgment denying Bay City’s petition for writ of mandate. On February 21, 2013, ...


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