× You have 2 more free articles available this month. Subscribe today.
$100,000 Settlement Recommended For County's Contract Breach
paying $100,000 to a drug testing firm to settle its breach of contract
suit against the county.
In September 1995 Los Angeles County entered a 5-year contract with
PharmChem to provide drug testing services to the county probation
department. Under the contract "transmittal" forms were to be provided to
the County at no expense. The County did, however, pay for "Chain of
Custody" forms throughout the contract period.
In September 2000 the County entered into a new 5-year contract with
PharmChem, with the same terms and conditions as the first contract. In
2004 the probation department performed an internal audit and determined
the County should not have been paying for "Chain of Custody" forms, which
the department determined were, in effect, "transmittal" forms.
Consequently, in August and September 2004 the County withheld $149,372.96
in payments to PharmChem, the amount it had paid for "Chain of Custody"
forms over the preceding four years.
PharmChem sued the County for breach of contract and a trial was set for
July 10, 2006. Before trial, however, the County Claims Board determined
that PharmChem entered the second contract with the belief that the County
would continue paying for the "Chain of Custody" forms as it had during the
first 5-year contract. Moreover, the Claims Board reasoned it was unlikely
that a jury would penalize PharmChem for relying on the County's 9-year
history of paying for the forms. Additionally, according to the
recommendation, "even if the term 'transmittal' form were found to be an
ambiguous term, ambiguous terms in a contract are construed against the
party who drafted the contract, which in this case was the County."
The Claims Board estimated that potential damages against the County would
amount to $164,372.96, which included the original $149,372.96 plus $15,000
in interest. The County had already spent $3,318 on in house attorney's
fees, the recommendation noted. PharmChem is now a dissolved corporation.
The company was winding up its business at the time of settlement. See:
PharmChem Inc. v. County of Los Angeles, Norwalk Superior Court, Case No.
As a digital subscriber to Prison Legal News, you can access full text and downloads for this and other premium content.
Already a subscriber? Login
Related legal case
PharmChem Inc. v. County of Los Angeles
|Cite||Norwalk Superior Court, Case No. VC 044584|
|Level||State Trial Court|