apply to “non-pecuniary actions, such as those seeking injunctive, specific, or declaratory relief.”2 In this case, Stronghold only sought


declaratory relief against the City for the interpretation of the waiver provision in a change order, which stated that Strong- hold agreed to: “Waive its rights to any due compensa- ble or excusable delays in time and money for all known and unknown knowledge of the project conditions, including unfore- seen site conditions and errors and omis- sions in the drawings and specifications, with the exception of any major owner changes affecting the critical path of the schedule or Acts of God or of the public enemy, fire, floods, epidemics, quarantine restrictions, strikes and freight embargoes.” The complaint at issue in this case


sought to resolve a dispute with the City about the interpretation of the above waiver provision. Stronghold sought a judicial determination that according to the change order the “City must compensate Strong- hold for due compensable or excusable delays in time and money for any changes made by or caused by the City to the Project that negatively impact the critical path.” Te key issue on appeal was whether


the declaratory relief complaint included a claim for money or damages. Stronghold argued that “[a] declaratory judgment merely declares the legal relationship between the parties.”3


Stronghold represents a fine line between what causes of action a contractor can pursue absent a pre-filing Government Code claim to a public entity.


“compensate,” the complaint sought only declaratory relief as to the interpretation of a contractual provision. It was not a complaint for specified money or dam- ages such that no advance Government Code claim was required. In so ruling, the appellate court saw a material difference between a judgment that defines the Parties’ rights and duties under a written agreement versus a judgment that applies an interpretation to a specific factual scenario. Unlike the latter, the former would not require a prefiling claim. The appellate court found that the


complaint was not an alternative to a damages claim (the City’s argument), but a permissible precursor to a potential damages claim. Judgment was reversed in favor of


Te City argued


that the complaint was a claim for money or damages because it sought a determi- nation that the City must “compensate” Stronghold for certain delays. In rejecting the City’s argument, the


appellate court determined that the complaint was not seeking or attempting to show entitlement to damages of any kind. Despite referencing an obligation to


Stronghold. Te matter was remanded for further proceedings. As the prevailing party on appeal, Stronghold was awarded its appellate costs.4


Impact on General Contractors and the Construction Industry as a Whole Stronghold represents a fine line between what causes of action a contractor can pursue absent a pre-filing Government Code claim to a public entity. If there is a dispute as to contract language, then it may


2 Minsky v. City of Los Angeles (1974) 11 Cal.3d 113, 121. 3 Stronghold citing Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 898. 4 Pursuant to Cal. Rules of Court, rule 8.278(a).


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CALIFORNIA CONSTRUCTOR MAY/JUNE 2024


be in the contractor’s best interest to file a declaratory relief lawsuit as to the inter- pretation of the contract language without pursuing a claim for money or damages. However, if a contractor is seeking money or damages in its claim, or going a step beyond the Stronghold facts and seeking the application of an interpre- tation of a party’s rights, the contractor must first present a Government Code claim to the public entity. If the contractor first pursues a declaratory relief action, it arguably can thereafter proceed with both the presentation of a Government Code claim and the filing of an action to pursue that claim. It remains to be seen what benefit a contractor will gain by taking this three-step process for pursuing a claim against a public entity.


Justin Gelzayd, an attorney with SMTD Law LLP, is licensed in California and Florida and focuses his practice on construction


and surety litigation. His professional experience has included litigating cases involving construction defects, contract and bid disputes, and forming corporations and LLCs. He can be reached at (949) 537-3806 or JGelzayd@ smtdlaw.com.


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