The California Supreme Court, in Los Angeles Unified School District v. Great American Ins. Co., 49 Cal.4th 739 (2010), held that a general contractor was entitled to relief due to a school district’s nondisclosure of certain conditions regarding the construction project.
Plaintiff, a school district, accepted the defendant-contractor’s bid to complete a school construction project that was started by another contractor. The contractor sought extra compensation for correcting undisclosed defects. The district paid the contractor for the extra compensation and filed this action to recover the extra compensation.
The trial court granted the district’s motion for summary adjudication and judgment on the pleadings on the contractor’s cross-complaint for breach of contract based on the nondisclosure of material information. The appellate court reversed the trial’s court’s decision.
The Supreme Court affirmed the appellate court’s decision, adopting the superior knowledge doctrine, under which a contractor on a public works contract can be entitled to relief for a public entity’s nondisclosure in the following limited circumstances: (1) the contractor submitted its bid or undertook to perform without material information that affected performance costs; (2) the public entity was in possession of the information and was aware the contractor had no knowledge of, nor any reason to obtain, such information; (3) any contract specifications or other information furnished by the public entity to the contractor misled the contractor or did not put it on notice to inquire; and (4) the public entity failed to provide the relevant information.
The Supreme Court further stated in its decision that the public entity may not be held liable for failing to disclose information a reasonable contractor in like circumstances would or should have discovered on its own, but may be found liable when the totality of the circumstances is such that the public entity knows, or has reason to know, a responsible contractor acting diligently would be unlikely to discover the condition that materially increased the cost of performance.
Wendy L. Wilcox earned her B.A. (1993) in Sociology, with honors, from the University of California, Los Angeles. Wendy earned her J.D. (1997), with honors, from Southwestern University School of Law. She has also received various awards, including Excellence For the Future Award – Employment Discrimination Law and Exceptional Achievement Award – Intellectual Property. Wendy focuses her attention in the areas of products, premises and professional liability, construction defect and insurance coverage litigation and employment practices litigation. She has written numerous articles concerning insurance coverage, construction defect, litigation, arbitration, expert witnesses, and has presented this material at seminars. Wendy has also represented several defendants in published California Appellate and Supreme Court decisions. Wendy is a member of the Los Angeles County Bar Association, Professional Liability Underwriters Society and Defense Research Institute. She is admitted in all courts in California, both state and federal. Wendy is also admitted to practice before the Ninth Circuit Court of Appeals. Email email@example.com.