The California Court of Appeal recently ruled in Katsura v. City of San Buenaventura [1] that a city was not liable for extra work performed that was not specified in the parties’ contract but was purportedly orally authorized by a city employee.
In Katsura, plaintiff entered into an engineering consultant contract with the City of San Buenaventura (the “City”). The contract stated that the maximum amount the City would pay for plaintiff’s services was $18,485 and that all modifications were only to be made by the written mutual consent of both parties.
Plaintiff was paid for the first and second invoices he submitted, for $2,943.25 and $12,621.75 respectively. Yet, when plaintiff submitted his final invoice for $23,743.75 for work performed, the City refused to pay the invoice because it was beyond the maximum contract price and included work that was not authorized by the contract. At trial, plaintiff admitted that he did not follow the proper procedure to obtain authorization for extra work; however, he alleged that City engineers told him to perform the additional work.
The Court of Appeal first noted that since the City is a charter city, the City’s charter prescribes how the City should enter contracts. Under the charter, the City engineers did not have the authority to enter into oral contracts to modify the original contract. Thus, the court found that the implied oral contract was void because it did not conform to the proscribed method of entering into City contracts.
The court also noted that persons dealing with a public agency are presumed to know the law with respect to the agency’s authority to contract. The court cited Amelco Electric v. City of Thousand Oaks [2] which stated: “It may sometimes seem a hardship upon a contractor that all compensation for work done, etc., should be denied him; but it should be remembered that he, no less than the officers of the corporation, when he deals in a matter expressly provided for in the charter, is bound to see to it that the charter is complied with. If he neglect[s] this, or choose[s] to take the hazard, he is a mere volunteer, and suffers only what he ought to have anticipated. If the statute forbids the contract which he has made, he knows it, or ought to know it, before he places his money or services at hazard.” [3]
Consequently, the City was not liable to pay plaintiff’s quantum meruit claim. The court emphasized that plaintiff knew he was performing extra work outside the scope of the contract and was not following the proper procedure for performing additional work.
[1] 2007 DJDAR 14311.
[2] Amelco Electric v. City of Thousand Oaks (2002) 27 Cal. 4th 228.
[3] Id. at 235.
