## Facts

- A licensed specialty subcontractor submitted a telephone bid to a general contractor to furnish and install acoustical tile on a public school construction project.
- The general contractor submitted its prime bid to the public owner and, as required by the subcontractor listing statute, listed the subcontractor as the acoustical tile subcontractor.
- After award of the prime contract, a trade publication reported the award and identified the listed subcontractors.
- Relying on the listing and the reported award, the subcontractor refrained from bidding on other jobs to stay within bonding limits.
- The general contractor sought and obtained the public owner’s consent to substitute a different subcontractor, asserting the original subcontractor had been “inadvertently listed.”
- The displaced subcontractor alleged economic loss, including lost profits and lost opportunities, based on the listing and the later substitution.

## Issues

1. Whether the subcontractor listing statute imposes duties on the prime contractor and the public owner that run to the benefit of the listed subcontractor.
2. Whether a listed subcontractor may recover damages for violation of statutory substitution restrictions even though the statute does not expressly provide a damages remedy.
3. Whether the complaint, challenged on demurrer, stated a cause of action at least for breach of statutory duty based on an allegedly improper substitution.

## Decision

- The California Supreme Court reversed the judgment of dismissal insofar as it rested on failure to state a claim for breach of statutory duty.
- The Court held the complaint stated a cause of action for breach of statutory duty arising from the subcontractor listing law’s restrictions on substitution.
- The case was remanded for further proceedings consistent with recognizing that statutory-violation theory.

## Legal Principles

- A statute enacted to protect a particular class can create duties enforceable in a civil action by members of that class injured by its violation, absent contrary legislative intent.
- California’s subcontractor listing law is designed to prevent bid shopping and bid peddling and to stabilize subcontract relationships formed at the time of bidding.
- The statutory scheme’s listing requirement and limits on post-award substitution can create obligations owed to the listed subcontractor by the prime contractor and by the public entity that approves substitutions.
- A listed subcontractor may seek damages when an allegedly unauthorized substitution is approved in violation of statutory grounds or procedures, even if the statute is silent on a damages remedy.

## Conclusion

The court recognized that the subcontractor listing statute’s protections are enforceable through a civil damages action by a listed subcontractor allegedly displaced through an improper substitution, and it reinstated the statutory-duty claim after dismissal on demurrer.


Southern Cal. Acoustics Co. v. C. V. Holder, Inc., 71 Cal. 2d 719, 456 P.2d 975 (Cal. 1969)