Judge Mitchell L. Beckloff, Case 22STCP03723 2023-03-24 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 22STCP03723, Date: 2023-03-24 Tentative Ruling

On October 12, 2022, Petitioner, Bashboy Enterprises, Inc., filed its Verified Petition for Writ of Mandate seeking an order setting aside the decision of Respondent, the County of Los Angeles, to award a contract for janitorial papers supplies to a vendor other than Petitioner. Petitioner also requests an order awarding it the contract.

Petitioner’s unopposed request for judicial notice (RJN) of Exhibit 1 is granted. (Evid. Code,

Petitioner alleges Respondent’s Internal Services Division (ISD) solicited bids for a brand specific janitorial paper supplies contract (the Contract) through a request for bids (RFB). (Pet. ¶¶ 1, 4, Ex. 1.)

The RFB identified three “private label” products. (Pet., Ex. 1 [RFB, Items 19, 20, and 25].) A private label product is one made by a manufacturer exclusively for a specific vendor. (Pet., ¶ 9.) The three private label products included in the RFB are products made specifically for Aramsco, Inc., a vendor that submitted a bid in response to the RFB. (Pet., ¶ 9.)[1]

Petitioner, a certified Local Small Business Enterprise (LSBE), submitted a bid in response to the RFB.

The County provided a notice of intent to award the contract to two companies, Brady and American Sanitary Supply Inc. (American), “awarding each item separately.” (Pet., ¶ 12.) After, Petitioner questioned the County’s award decision, the County issued “a new notice of intent to award each line item separately to Aramsco.” (Pet., ¶ 12.)

On August 5, 2022, Petitioner submitted a timely protest of the County’s decision. Petitioner argued an award of the Contract to Aramsco was arbitrary, capricious and lacking in evidentiary support.[2] Petitioner suggested the County should have disqualified Aramsco for failing to comply with the RFB’s requirement that each bidder submit a completed Appendix A or a required supplier authorization. (Pet., ¶ 18.)

On September 9, 2022, the County responded to Petitioner’s protest. The County reported it “made the decision to award to multiple vendors. Agreements will be awarded to [Petitioner], Aramsco and Brady Industries.” (Pet., ¶ 19.)

The County’s response confused Petitioner. Petitioner did not understand what Items each bidder had been selected to supply. (Pet., ¶ 20.) The County clarified that it awarded the following line items to the following vendors: Petitioner – 1-18, 21-24, and 26; Brady – 1-18, 21-24, and 26; and Aramsco – 1-26. (Pet., ¶ 21.)

Petitioner alleges Brady also failed to submit the required supplier authorization and registration information. Therefore, according to Petitioner, the County should have disqualified Brady. (Pet., ¶ 21.)

The petition alleges the County engaged in arbitrary and capricious conduct in multiple respects, failed to follow its own regulations and bid solicitation, and made an award lacking in evidentiary support. Specifically, Petitioner contends the bid process was improper because neither Aramsco nor Brady complied with the requirements of the RFB and should have been disqualified. (Pet., ¶ 18, 29.c.-d.) Petitioner claims the County also violated its own ordinances by failing to give preference to Petitioner as an LSBE over Aramsco and Brady with the award of the Contract. (See Pet., ¶ 29.a.) Finally, Petitioner alleges Aramsco was only the lowest bidder on its private label products, yet it improperly received a contract on all RFB items. (Pet., ¶ 29.e.)

A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (Code Civil Proc., § 430.30, subd. (a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “We assume the truth of the allegations in the complaint, but do not assume the truth of contentions, deductions, or conclusions of law.” (California Logistics, Inc. v. State (2008) 161 Cal.App.4th 242, 247.)

A demurrer may be sustained without leave to amend when there is no reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan, supra, 39 Cal.3d at 318.) Indeed, where the facts are not in dispute and the nature of the petitioner's claim is clear, but no liability exists under substantive law and no amendment would change the result, the sustaining of a demurrer without leave to amend is proper. (City of Ceres v. City of Modesto (1969) 274 Cal.App.2d 545, 554.) The burden is on the petitioner to show how the complaint might be amended so as to cure the defect. (Association of Community Organizations for Reform Now v. Department of Industrial Relations (1995) 41 Cal.App.4th 298, 302.)

The County makes several arguments in support of its demurrer. The County’s arguments seemingly fails to recognize a challenge on demurrer is limited to the face of the pleadings. That is, the court does not resolve factual disputes on demurrer.

First, the County argues the Contract’s award to three vendors, including Petitioner, was within the County’s discretion and in its best interests. By awarding the Contract non-exclusively to Petitioner, Brady, and Aramsco, the County asserts it acted in its best interests. The County notes it “will have access to all agreements and may purchase from any of the awarded agreement vendors as needed to meet the department’s operational requirements” based on the manner in awarded the contract. (Pet., ¶ 23.)

The County also notes Petitioner admits it did not offer the lowest prices—Brady’s bid prices were lower than those of Petitioner even with consideration of Petitioner’s status as a LSBE. The County reports Aramsco could supply the exclusive brand name items other bidders could not offer and offered all 26-line items identified in the RFB. (The County does not support its argument with a citation to the petition.)

Those arguments by the County not appropriate on demurrer. The court cannot make a factual determination of what is in the County’s best interests on this motion. The court is required to take Petitioner’s allegations as true when considering a demurrer. Thus, the court notes and takes as true Petitioner’s allegations the County intended through its RFP to award the Contract to the lowest responsible bidder; Petitioner was the lowest responsible bidder (except for three private label items)—not Brady or Aramsco. (Pet., ¶¶ 1, 5, 12, 29.) The petition also alleges the County failed to comply with its own RFB specifications by not disqualifying Brady and Aramsco. (Pet., ¶ 29.) Thus, according to the allegations, the County had a duty to award the contract to Petitioner—after disqualifying Brady and Aramsco.

In the context of competitive bidding and awarding contracts, a public entity's “ ‘award of a contract, and all of the acts leading up to the award, are legislative in character.’ [Citation.]”

(Mike Moore's 24–Hour Towing v. City of San Diego (1996) 45 Cal.App.4th 1294, 1303.) Here, the County’s award of the Contract to Petitioner and two other bidders amounted to a legislative determination. Review of “a local entity's legislative determination is through ordinary mandamus under [Code of Civil Procedure] section 1085. ‘Such review is limited to an inquiry into whether the action was arbitrary, capricious or entirely lacking in evidentiary support. [Citation.]’ . . . ” (Ibid.)

Notwithstanding the County’s ability to exercise some discretion within public contracts, the court finds Petitioner’s allegations state a claim under Code of Civil Procedure section 1085.

The County also argues it did not owe Petitioner any ministerial duty to equally allocate a certain minimum quota of orders from the RFB between Petitioner, Brady and Aramsco. (Demurrer 11:14-16.) While that appears true, Petitioner does not raise issues related to allocation of items in the RFB between multiple vendors. Petitioner asserts the County should not have entered into any contract with Brady and/or Aramsco.

Accordingly, the County’s discretion and best interest argument are unavailing.

The County also argues it exercised its discretion to select the most responsive and responsible vendor. Such discretion, the County contends, cannot be controlled by the court.

The court recognizes a traditional writ of mandate will not lie to control discretion conferred upon a public officer or agency. That is, a writ of mandate cannot be used control the County’s discretion. (See Venice Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547, 1558, citing Lindell Co. v. Board of Permit Appeals (1943) 23 Cal.2d 303, 315; and Faulkner v. California Toll Bridge Authority (1953) 40 Cal.2d 317, 326.)

A writ of mandate is appropriate, however, when discretion is exercised arbitrarily, capriciously and/or entirely lacking in evidentiary support.

There is no dispute the County enjoys appropriately exercised discretion to decide the lowest responsible and responsive bidder in response to a request for bid.[3] Here, Petitioner’s allegations do not challenge the fact of the County’s discretion. Instead, Petitioner alleges the County’s exercise of discretion was arbitrary, capricious and/or entirely lacking in evidentiary support because the County deviated from the requirements of the RFB and the award process.

The County also contends it exercised its discretion by waiving Brady and Aramsco’s failure to include certain documents in its bid proposal. The County argues the omissions were “minor technical errors.” (Demurrer 13:11-12.) The County asserts public entities have the power to waive deviations from specified instructions in a public contract bid so long as the deviations are inconsequential. (Ghilotti Construction Co. v. City of Richmond (1996) 45 Cal.App.4th 897, 900.)

Whether the failures of Brady and Aramsco to provide certain information in their proposals constitutes “minor technical errors” is an issue the court cannot resolve on demurrer. (Demurrer 13:11-12.) The court has no factual context to make such a finding. The court cannot find the failures by Brady and Aramsco were inconsequential as a matter of law.

Finally, the County argues Petitioner would have been disqualified but for the County’s exercise of discretion. The County advises Petitioner’s inability to supply three line item products would have barred Petitioner from an award of the contract because its bid proposal was technically nonresponsive to requirements of the RFB. (Reply 2:14-16.) Such fact—even if true—does not undermine the legal basis of Petitioner’s claim the County legally erred in awarding a contract to Brady and Aramsco.

The court intend to set the matter for an expedited trial given the relief sought.

[1] For example, Item 25 in the products sought by the RFB is a toilet seat cover that includes Aramsco’s branding, “Empire Cleaning Supply,” as well as its logo, on the product. (Pet., ¶ 9.)

[2] Petitioner also raised issues about the bid specifications. (Pet., ¶ 16.b. [“If line items in the RFB have specifications for private label products made by a manufacturer for one specific vendor, and the County rejects alternatives from other vendors, then the vendor for whom private label products are made has an unfair advantage, as Aramsco did under these circumstances.”])

[3] A “responsible bidder” is a bidder who has demonstrated the attribute of trustworthiness, as well as quality, fitness, capacity, and experience to satisfactorily perform the public works contract. (See Pub. Contract Code, § 1103.)