SOUTHERN CALIFORNIA ACOUSTICL CO v. HOLDER INC

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Court of Appeal, Second District, Division 4, California.

SOUTHERN CALIFORNIA ACOUSTICL CO., Inc., Plaintiff and Appellant, v. C. V. HOLDER, INC., and Los Angeles Unified School District of Los Angeles County, Defendants and Respondents.

Civ. 31790.

Decided: August 02, 1968

Munns & Kofford and Milton J. Morris, San Marino, for plaintiff and appellant. Grant & Popovich and Irvin Grant, Beverly Hills, for defendants and respondents.

The plaintiff corporation appeals from a judgment of dismissal entered after a demurrer to its second amended complaint was sustained without leave to amend.

The complaint contains three asserted causes of action. The first cause of action alleges the following facts: Plaintiff, a licensed subcontractor, on November 24, 1965, submitted a bid by telephone to defendant C. V. Holder, Inc., a general contractor, for subcontract work installing acoustical tile on a public school construction job which C. V. Holder was preparing to bid on. After receiving plaintiff's bid, on the same date C. V. Holder submitted a bid to defendant Los Angeles Unified School District for the prime contract to do the job. In its bid C. V. Holder listed plaintiff as one of its subcontractors. C. V. Holder was subsequently awarded the prime contract. The fact that the contract had been awarded to C. V. Holder was published in a local trade newspaper along with the names of the subcontractors listed in C. V. Holder's successful bid. Plaintiff's name was included. The newspaper has a wide distribution among subcontractors. C. V. Holder knew when it submitted its bid that, if it was accepted, plaintiff's name would be published in the newspaper and plaintiff would be informed of that fact. Plaintiff became aware from the newspaper that C. V. Holder had been awarded the contract and that it was listed as a subcontractor. Plaintiff refrained from bidding on other construction projects to remain within its bonding limits, and held itself in readiness to perform its contract believing that C. V. Holder had accepted its bid. C. V. Holder failed to notify plaintiff that plaintiff's bid had not been accepted. C. V. Holder should have foreseen that plaintiff, after seeing its name listed as a subcontractor, would change its position believing its bid had been accepted. In the latter part of December 1965 or early in January 1966, C. V. Holder breached its contract with plaintiff by causing the School District to substitute another subcontractor to perform the work plaintiff was to perform.

In the second stated cause of action plaintiff alleges that it sustained damages as the result of C. V. Holder's negligence in listing plaintiff's name as a subcontractor in the bid for the prime contract.

For a third cause of action plaintiff alleges that it is a third party beneficiary of the prime contract.

A general demurrer is properly sustained where no cause of action at all is shown by the complaint. (County of Los Angeles v. Read, 193 Cal.App.2d 748, 751, 14 Cal.Rptr. 628.) It is properly sustained without leave to amend when it is apparent that the complaint cannot be amended to state a cause of action. (Marin v. Jacuzzi, 224 Cal.App.2d 549, 552, 36 Cal.Rptr. 880.)

With respect to the first stated cause of action of plaintiff's complaint, two theories are advanced in support of the claim that it alleges a cause of action against C. V. Holder based on contract. The first theory is that C. V. Holder manifested an acceptance of plaintiff's bid by listing plaintiff as a subcontractor in the bid for the prime contract with the knowledge that plaintiff would be informed of such listing through the trade newspaper. Plaintiff asserts that the act of the general contractor in listing the name of a subcontractor in its bid to the building agency, is commonly regarded in the trade as constituting an acceptance of the bid of the subcontractor, conditioned only on the acceptance of the general contractor's bid by the building agency. Plaintiff's second approach is that C. V. Holder is estopped to deny the existence of the subcontract because C. V. Holder set in motion a set of circumstances which led plaintiff to reasonably believe an acceptance had taken place; that, under the circumstances, C. V. Holder was under a duty to notify plaintiff that the bid was rejected. We conclude that neither theory finds support in the law, and that plaintiff has not alleged a cause of action against C. V. Holder.

At the outset, it must be recognized that plaintiff's name was listed as a subcontractor in C. V. Holder's bid for the prime contract, because a statute requires that the general contractor's bid include the names of subcontractors who are to perform one-half of one percent or more of the construction work. (Gov.Code § 4104.) The statute confers no special rights on the subcontractors listed, its purpose being aimed at protecting the public and the awarding authority. (Klose v. Sequoia Union High School Dist., 118 Cal.App.2d 636, 641, 258 P.2d 515.)

Contrary to the urging of plaintiff, it is well established that a subcontractor's bid does not become binding merely upon the awarding of the construction contract to the general contractor in the absence of an express agreement to that effect. (Klose v. Sequoia Union High School Dist., supra, 118 Cal.App.2d 636, 640–641, 258 P.2d 515; Norcross v. Winters, 209 Cal.App.2d 207, 217, 25 Cal.Rptr. 821; Western Concrete Structures Co. v. James I. Barnes Constr. Co., 206 Cal.App.2d 1, 13, 23 Cal.Rptr. 506; Neptune Gunite Co. v. Monroe Enterprises, Inc., 229 Cal.App.2d 439, 445–446, 40 Cal.Rptr. 367.)

Quoting from Klose v. Sequoia Union High School Dist., supra, (118 Cal.App.2d at pp. 640–641, 258 P.2d at p. 517):

‘Petitioner's arguments are necessarily predicated upon the concept that a subcontractor, whose name is submitted with the bid of the general contractor, in some undefined way, secures some legal rights when the general contractor's bid is accepted by the awarding authority. In the absence of statute that is not the law. A subcontractor bidder merely makes an offer that is converted into a contract by a regularly communicated acceptance conveyed to him by the general contractor. No contractual relationship is created between the subcontractor and the general contractor even though the bid is used as part of the general overall bid by the general contractor and accepted by the awarding authority. [Citations.]’

Nor do the facts pleaded raise an estoppel. ‘As a general rule, mere silence does not constitute an acceptance of an offer. Silence alone does not give consent, even by estoppel, since there must not only be the right, but the duty, to speak before the failure to do so can rstop a person afterward to set up the truth, * * *’ (17 C.J.S. Contracts § 41, p. 670.) Thus, ‘an estoppel may arise from silence, but only where there is a duty to speak, * * *’ (People v. Ocean Shore Railroad, 32 Cal.2d 406, 421, 196 P.2d 570, 580.) And a duty to speak has been found only in those cases where it is shown that there was a previous course of dealing or a fiduciary relationship between the parties. (1 Witkin, Summary of Cal. Law, Contracts, § 60, pp. 65–66.)

The cases cited by plaintiff for the proposition that silence will constitute acceptance, (Shell Chemical Corp. v. Owl Transfer Co., 173 Cal.App.2d Supp. 796, 344 P.2d 108; Meherin v. Meherin, 93 Cal.App.2d 459, 209 P.2d 36; Wood v. Gunther, 89 Cal.App.2d 718, 201 P.2d 874), all involved ‘special relationships' not here present.

Particular significance is ascribed by plaintiff to the allegation that the list of the names of subcontractors on C. V. Holder's successful bid (which included plaintiff's name), was published. As indicated above, the listing of subcontractors was required by statute. When the bids were thereafter opened, the contents became matters of public record. C. V. Holder had no control over the publication of the contents. Accordingly, this added fact provides no reasonable basis for the argument that a duty to reply existed or indicating that plaintiff was justified in relying on C. V. Holder's silence.

Looking at plaintiff's second asserted cause of action, which is based on a theory of negligence rather than on a contract, it is alleged that C. V. Holder negligently listed plaintiff in the bid to the School District; that, as a direct and proximate result, plaintiff sustained damages in planning to perform the contemplated subcontract.

To state a cause of action for negligence, facts must be alleged showing ‘the existence of a duty of care owed by the alleged wrongdoer to the person injured, or to a class of which he is a member.’ (Routh v. Quinn, 20 Cal.2d 488, 491, 127 P.2d 1, 3.) Plaintiff has not alleged facts indicating any duty of care was owing to it by C. V. Holder. As already pointed out in connection with plaintiff's first alleged cause of action, the listing of proposed subcontractors was for the benefit of the public and the awarding authority; it was not intended to create any rights in the listed subcontractors. (See Klose v. Sequoia Union High School Dist., supra, 118 Cal.App.2d 636, 641, 258 P.2d 515.)

The third stated cause of action goes back again to a contract theory. It alleges that C. V. Holder and the School District intended to confer a benefit on the subcontractors named in the successful bid of C. V. Holder. The argument is advanced that the listing of plaintiff as a subcontractor made plaintiff a third party donee beneficiary of the contract between C. V. Holder and the School District, giving plaintiff the right to sue for breach of contract when a different subcontractor was substituted in place of plaintiff. The allegation in the complaint that the parties to the prime contract intended to benefit the subcontractors named in the prime contractor's bid, is the statement of a conclusion and not of an ultimate fact admitted for purposes of a general demurrer. No facts are pleaded by plaintiff which would alter the plain language of the contract between the defendants (which is pleaded by way of exhibit), clearly demonstrating that the only reason for listing plaintiff as a subcontractor was to comply with the statute requiring such listing. As already emphasized, it is well settled that the listing of subcontractors pursuant to statutory requirements is not intended in any way to benefit the subcontractors listed. From the facts alleged, plaintiff is, at most, an incidental beneficiary. As such, plaintiff has no contractual right to maintain an action against defendants. (See Southern Cal. Gas Co. v. ABC Construction Co., 204 Cal.App.2d 747, 752, 22 Cal.Rptr. 540.)

We conclude that plaintiff's second amended complaint does not state a cause of action on any theory, and that it is evident the pleading cannot be successfully amended.

The judgment of dismissal is affirmed.

JEFFERSON, Associate Justice.

FILES, P. J., and COLLINS, J. pro tem.,* concur.