In California Taxpayers Network v. Taber Construction, Inc., published November 27, 2019, the First District Court of Appeal, Division 2 affirmed summary judgment in favor of the defendant contractor in a lawsuit brought under Government Code section 1090. A school district intended to hire a firm to complete a project to modernize the HVAC for multiple schools. The project would be performed in two stages. In the first stage, the firm would enter into a preconstruction services agreement to work with district staff, the program manager, and the architect to provide a guaranteed maximum price for the project. In the second stage, the district would enter into a lease/leaseback agreement with the contractor. After the contractor entered into the preconstruction services agreement and then the lease/leaseback agreement, the taxpayers group alleged that the contractor had violated section 1090 because its agreements in the first stage precluded it from entering into the contract in the second stage.
The court of appeal ruled that the trial court properly rejected that interpretation of section 1090. An independent contractor may violate section 1090, but only if it was entrusted with acting on behalf of the government. For instance, a person who was hired as an officer or employee with the responsibility of contracting on behalf of an entity and then rehired as an independent contractor with the same responsibilities would be subject to section 1090. But participation in the preconstruction services agreement phase did not preclude the contractor from entering into the lease/leaseback agreement in the second phase. The contractor was not hired to engage in or advise on public contracting on behalf of the school district. The district did not hire the contractor to choose a firm to perform the second phase contract; it hired the contractor to perform both phases. That did not violate section 1090.
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