It was a fairly big surprise, given that Centinela had led the program for the previous five years – two vehicles totaling $1 billion – with decent returns (albeit not spectacular). Moreover, Centinela had even gone so far as to boot co-founder Cesar Baez at CalPERS’ request, due to his personal relationships with some of the folks involved in the “placement agent” kickback scandal. No public explanation was ever provided (perhaps, in part, because the guy making such decisions – Real Desrochers – hasn’t given any interviews since taking over as alt assets boss last summer).

Now, Centinela believes that it was rejected for reasons outside of its investment acumen.

Fortune has obtained documents showing that Centinela filed a grievance with California’s Victim Compensation and Government Claims Board in April, alleging that CalPERS should be held liable for racial discrimination, breach of contract and fraud.

The Los Angeles-based firm – whose majority owners are two Latinos and one African-American – argued that the original request to dump Baez was racially-motivated. From its draft complaint:

“Centinela is informed and believes and thereon alleges that the fact that Baez is Latino, like the placement agents under investigation, played a major role in CalPERS’s decision.”

But the firm got rid of him anyway, allegedly because CalPERS orally promised that a Baez-less Centinela would receive a $100 million emerging managers mandate and the opportunity to compete for a larger contract. Centinela then claims that CalPERS reneged on the $100 million, and also disqualified it from the larger contract process.

Last week, the Victim Compensation and Government Claims Board rejected Centinela’s claim, saying that the proper venue would be Los Angeles Superior Court. So far, Centinela does not appear to have actually filed suit, and calls to both the firm and its attorney were not returned. I also reached out to Cesar Baez via a personal email address, but have not heard back.

For its part, CalPERS sent over the following statement: “CalPERS has been a leader in developing emerging manager programs and has a demonstrated commitment to provide fair access to managing CalPERS assets. Our record in this regard is clear.”

My gut take: Centinela’s argument on the racial discrimination seems pretty weak. CalPERS has been cutting all sorts of outside fund manager ties over the past couple of years – as part a broader plan to bring more alt asset activies in-house. Just ask Pacific Corporate Group (ties to the placement agents). Or Grove Street Advisors (no such ties). Prety sure racial discrimination wasn’t a component in those.

As for the $100 million promise, that one could be interesting. Want to see what evidence Centinela has, if it chooses to proceed in court.

Sign up for Dan’s daily email newsletter on deals and deal-makers: GetTermSheet.com