Los Angeles Unified School District v. Great American Insurance Co.
Supreme Court of California
234 P.3d 490 (2010)
The District (defendant), after firing a prior contractor mid-construction, solicited bids to finish an elementary school based on a list of needed repairs, and Hayward (plaintiff) bid and contracted for $4.5 million based on that list; once work began, Hayward discovered the problems were far more extensive than represented and sought $2.8 million more, alleging the District possessed but never disclosed a consultant's report showing more serious stucco defects than the list indicated and that Hayward's proposed fix would be inadequate. Hayward did not allege the District's nondisclosure was intentional, leaving unsettled whether a public entity's merely negligent nondisclosure was actionable.
Whether, if a public entity knows but does not disclose material facts before the parties enter a contract, the public entity may be required to pay for extra expenses resulting from the nondisclosure.