Dynamic Industries Co. v. Long Beach

In Dynamic Industries Co. v. Long Beach (1958) 159 Cal.App.2d 294, the city attorney and city manager of Long Beach drafted a contract allowing the plaintiff to recover oil and gas deposits located beneath city-owned property for a period of 35 years. On March 17, 1942, the city council adopted a resolution approving the precise wording of the proposed contract. After the resolution was adopted, plaintiffs expended significant sums of money that were "'necessary to the performance of its duties and obligations in relation to the contract.'" (Id. at p. 297.) The city, however, failed to put plaintiffs in possession of the deposits. Plaintiffs filed a breach of contract claim arguing that "the city council accepted its offer by adopting the resolution of March 17, 1942, and that the offer and acceptance created a binding agreement." (Id. at p. 298.) The city contended that it was not bound by the contract because the document was "never signed by the city manager, as its charter requires." (Ibid.) The court ruled in favor of the city, explaining: "the contract whose validity plaintiff seeks to establish was not signed by the city manager, as the charter requires. . . . The city is bound only by contracts executed in accordance with the charter provisions." (Dynamic Industries, supra, 159 Cal.App.2d at pp. 298-299.) The Court also concluded that "when the charter provision has not been complied with, the city may not be held liable under quasi contract, and it will not be estopped to deny the validity of the contract. . . . The fact that plaintiff expended a substantial sum in reliance upon the 1942 resolution is immaterial in view of the charter limitation." (Id. at p. 299.)