Real Estate and Construction Law Blog

Diede Construction, Inc. v. Monterey Mechanical Co.
125 Cal. App. 4th 380 (1st Dist. Dec. 28, 2004)

General contractor bidding on a public works project to remodel a city hall learned, after the bids were opened but before general contractor executed a contract with the city, that the proposal submitted by its HVAC subcontractor contained a $300,000 clerical error. General contractor executed the contract with the city, secured replacement contractors when subcontractor refused to honor its bid and sought to recover from subcontractor the additional costs incurred for the HVAC work.

The Court of Appeal held that statutory provisions for the relief of mistaken bidders do not apply to mistaken bids submitted by a subcontractor to a general contractor. Under Saliba-Kringlen Corp. v. Allen Engineering Co., 15 Cal. App. 3d 95 (1971), if general contractor can establish that it reasonably relied on subcontractor's mistaken bid, general contractor is entitled to recover from subcontractor the additional costs paid to a substitute contractor.