Caseflicks

California Supreme Court • 1960

Elsinore Union Elementary School District of Riverside County v. Kastorff

353 P.2d 713 | 54 Cal. 2d 380 | 6 Cal. Rptr. 1 | 1960 Cal. LEXIS 174

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Takeaway

In short, this case holds that a public contractor may rescind a materially mistaken bid when an honest clerical error is promptly disclosed and enforcement would let the public entity exploit an inequitable bargain.

Background

Kastorff, a building contractor, submitted a bid of $89,994 to construct additions to the school district's buildings. While compiling the bid under a tight deadline, he received plumbing subcontractor bids of $9,285 and then $6,500. Believing that the earlier plumbing figure had already been included in his total, he subtracted roughly $3,000 from the total. In fact, no plumbing cost had been carried into the total column at all.

When the bids were opened, Kastorff's bid was $11,306 below the next lowest bid. Asked that evening whether his figures were correct, Kastorff briefly consulted his clerical assistant and said they were, but he did not have his worksheets with him. The next morning, he examined the worksheets, found the omitted plumbing item, promptly showed the error to the district's architect, and sought to withdraw the bid. He repeated that request in writing before the district sent him written notice awarding the contract.

The district refused to release Kastorff, later awarded the work to another contractor for $102,900, and sued Kastorff for the $12,906 difference. It also sought recovery against his bid surety. The trial court entered judgment for the district. Kastorff and his surety appealed.

Issues

Issue #1

Whether a public-works contractor may rescind a bid after discovering an honest clerical mistake that omitted a material cost item from the bid total.

Holding

Yes. Kastorff was entitled to rescind because the omission of plumbing costs was a material, honest clerical mistake, he promptly gave notice, and enforcing the bid would be inequitable.

Reasoning

Under M. F. Kemper Construction Co. v. City of Los Angeles, an opened public bid is generally an irrevocable option in favor of the public entity. But the bidder may rescind if the requirements for equitable rescission based on mistake are met: the mistake must be material, not caused by neglect of a legal duty, enforcement must be unconscionable, the other party must be capable of being returned to the status quo, and the bidder must promptly give notice of rescission.

Kastorff's worksheets and the uncontradicted testimony of both Kastorff and the district's own architect established the error. The worksheets showed plumbing bids in the preliminary columns but no plumbing amount in the final total column. His final bid therefore contained no allowance at all for plumbing, even though both parties plainly expected the construction work to include it.

The omission was material. Whether the omitted plumbing cost was $6,500 or $9,285, it was a substantial component of an $89,994 bid. The Court noted that the percentage error exceeded the error in Lemoge Electric v. County of San Mateo, where the Court had recognized that the contractor could have rescinded had it chosen to do so.

Kastorff's carelessness did not amount to the neglect of a legal duty that bars rescission under Civil Code section 1577. Clerical mistakes of this kind can occur even in the work of reasonable and cautious businesspeople. The pressure of last-minute subcontractor bidding and Kastorff's failure to detect the omission before submitting did not make the mistake legally inexcusable.

Kastorff acted promptly once he had a practical opportunity to inspect his worksheets. Although he initially assured the board that the figures were correct, he lacked the papers needed to verify the calculation at the bid opening. The next morning, he discovered the omission, notified the architect and superintendent immediately, and repeatedly requested permission to withdraw.

Enforcing the bid would have allowed the district to capitalize on an unintended and inequitable bargain. The district knew of the error before it formally notified Kastorff in writing that his bid had been accepted. Its own bid form required written notice of acceptance before Kastorff had to execute the formal contract, and that notice came about two weeks after his rescission.

Issue #2

Whether the trial court's findings could defeat rescission despite the evidence of the clerical error and the district's notice of it.

Holding

No. The critical findings against Kastorff lacked evidentiary support or did not establish a legally disqualifying failure of care.

Reasoning

The trial court found that the purpose of Kastorff's worksheets and total column could not be determined. The Supreme Court held that this finding was unsupported: the worksheets themselves, Kastorff's testimony, and the testimony of the district's architect all demonstrated that the sheets were used to compile the final bid and that plumbing had been omitted from the total.

The trial court also found that the district did not know the bid was intended to be anything other than $89,994. That finding could not stand because the district's architect, superintendent, and a board member established that the district was informed of the mistake and of Kastorff's request to withdraw before the board rejected that request.

The finding that Kastorff had time to check his calculations before the bidding deadline did not alter the result. At most, it showed some carelessness; it did not prove the kind of neglect of legal duty necessary to deny equitable relief from a material clerical mistake.