Contractor Cannot Recover Damages for Abandonment or Quantum Meruit from Public Entity

Amelco Elec. v. City of Thousand Oaks, 27 Cal. 4th 228 (2002)

Amelco Electric was granted a prime contract for electric work related to the construction of a civic arts plaza for the City of Thousand Oaks.  During construction, the City issued over a thousand sketches to clarify or change the original contract drawings, of which 248 sketches affected electrical work.  Amelco requested 221 change orders, and the City and Amelco agreed upon 32 change orders.  As a result of the change orders, Amelco received $1 million over the contract price of $6.2 million.  Amelco later submitted additional change orders which were not accepted.  Upon completion of the project, Amelco submitted a $1.7 million claim for costs resulting from the noncaptured costs of the change orders.  By the time of trial, Amelco’s claim had increased to $2.2 million.  The City rejected the claim and Amelco sued for abandonment and breach of contract.  At trial, the jury determined that the City had both breached and abandoned the project and awarded Amelco $2.1 million.  The court of appeals affirmed the award and concluded that, as a matter of law, a public works contract can be abandoned.

The Supreme Court concluded that the abandonment theory of liability cannot apply to a public entity because it is fundamentally inconsistent with the purpose of competitive bidding statues.  The California Supreme Court found that, under long-standing California law, if a public contract is declared void a contractor may not be paid for work performed under that contract.  Furthermore, the Supreme Court found that a contractor could not pursue a quantum meruit recovery for extra work performed beyond the contract requirements of a public contract.  The Supreme Court reversed the court of appeals and remanded the breach of contract issue for a retrial on the amount of damages.