Construction Law

In a construction case, the Fourth District Court of Appeal held that the firm's client could not be forced to pay for destructive testing requested by others.

The appeal judge agreed with the firm’s interpretation of Government Contract terms regarding full time quality control inspection.

In a case against a construction surety, the Ninth Circuit Court of Appeals agreed with the firm's interpretation of the standards for proof of a bankruptcy claim.

2012: The firm successfully represented T.B. Penick & Sons, Inc., on its claim for payment on the Reunion Trails Project, a public work of improvement located in Henderson, Nevada. Upon completion of its work, the general contractor failed to pay the firm’s client citing difficulties in obtaining payment from the City of Henderson. The firm proceeded with a lawsuit against the general contractor and its payment bond. The firm also convinced the City to release the remaining construction funds to expedite final payment. Ultimately, the firm recovered the entire principal balance due the client totaling $463,451.65, plus payment of interest and attorney’s fees.

Counsel: David W. Smiley

2012: The firm successfully represented the client before the Small Business Administration’s Office of Hearings and Appeals in the appeal of an adverse SBA Size Determination. The SBA, through a Size Determination, held the firm’s client was not a small business due to affiliation with its 8(a) Mentor, alleging the firm’s client had violated the “3-2 Rule” and was economically dependent upon its Mentor. OHA considered the compelling factual evidence and legal argument made by the firm and reversed the SBA’s Size Determination, holding the firm’s client is a small business under the applicable NAICS code. This victory allows the firm’s client to pursue small business set aside contracts, which it would otherwise have been precluded from pursuing had the Size Determination remained in place.

Counsel: David S. Demian and Rodrigo F. Moreira

2011: The firm represented two clients, Brewer Crane & Rigging Company and Division 8, Inc. with claims for payment on a private 14 unit luxury condominium project in San Diego, California. Despite an insolvent developer, the firm recovered judgment against a private-money lender on bonded stop notices claims for the principal amount of nearly $275,000.00, as well as pre-judgment interest, bond premiums, attorneys’ fees and costs. The case concerned a $13.5 million construction loan which the defendant lender ceased funding as the project property value fell to less than that amount, and claimed it was not a construction lender for purposes of stop notice claims. Ultimately the owner went through bankruptcy and a senior lender foreclosed, thereby preventing either our clients or the defendant lender from recovering anything through their liens against the real property. The firm successfully argued that all of the construction loan funds not used to pay construction costs, including points, interest, fees, etc., whether paid to the defendant lender, paid to its participating investor/lenders, or as reimbursement for transaction costs, had to be disgorged for the benefit of the bonded stop notice claimants.

Counsel: Jeffrey B. Baird and Jon F. Gauthier

2011: The firm represented a large prime contractor specializing in Federal work in a bid protest against the Army Corps. of Engineers. The protest, on a proposal for $500 million worth of work on various Federal Installations, was based on the Army Corps’ improper rejection of a submittal in violation of its own specifications and applicable law. The firm prepared a bid protest and provided supporting cases and analysis to support the bid protest and discussions, ultimately resulting in the acceptance of the contractor’s submittal.

Counsel: David S. Demian and Nowell A. Lantz

2011: The firm's client was the low bidder for the electrical bid package on a multi-prime California public high school construction project. After the bid opening, a competing bidder protested the low bid, alleging the firm's client lacked a mandatory installer certification and failed to meet mandatory Disabled Veteran Business Enterprise outreach requirements. The firm immediately filed a comprehensive response to the protest and reached out to the school district's facilities staff. After evaluating the firm's response, the District rejected the bid protest and awarded the electrical bid package to the firm's client.

Counsel: P. Randolph Finch Jr. and Dustin R. Jones

2011: The firm’s client was a window subcontractor on a federal project at Schofield Barracks, Hawaii. As one of the first federal projects to be bid in the aftermath of September 11, 2001, disputes arose over who was responsible for the enhanced blast requirements. Upon completion of its work, the firm’s client pursued change order and contract balance claims against the general contractor and the Army. After reserving its client’s Miller Act claim, the firm pursued a certified pass-through claim to the Army. Approximately fifty percent of the certified claim was paid after the parties engaged in informal discussions. The remainder of the certified claim was denied and the firm then appealed the contracting officer’s decision to the Armed Services Board of Contract Appeals. Under ASBCA guidelines, the parties engaged in mediation and the firm’s client reached a negotiated settlement with the Army on the appealed claims. The firm’s client subsequently reached a negotiated settlement with the general contractor on the contract balance.

Counsel: Jeffrey B. Baird and Christopher R. Sillari

2011: The firm’s client was a painting contractor that was awarded a contract to repaint a commercial building. Upon completion of the work, the owner refused to pay the firm’s client based on a number of alleged defects in performance. The firm proceeded to trial and successfully obtained a verdict in favor of its client for the full value of its client’s services, as well as a substantial attorneys’ fee award. The owner appealed the attorneys’ fee award and the firm successfully briefed and argued the appeal, which resulted in the upholding of the trial court’s ruling and the subsequent granting of additional attorneys’ fees related to the appeal.

Counsel: David S. Demian and Christopher R. Sillari

2011: The firm represented the plaintiff in a dispute regarding payment for extra work performed as a subcontractor on three U.S.-Mexico border fence projects for Kiewit, the general contractor. During the course of litigation, Kiewit moved for summary judgment on the grounds Foundation Fence’s claims were subject to a mandatory pass-through and liquidation provision in the subcontract. To defeat the motion, the firm successfully argued the pass-through and liquidation provision was an unenforceable waiver of Miller Act payment bond rights. The parties reached a negotiated settlement after the firm defeated the motion.

Counsel: Louis J. Blum

2011: The firm’s general contractor client submitted a prime bid for a $9.3 million City of Riverside fire station project. The City rejected the bid as non-responsive, contending the bidder failed to complete the City’s bid form. Hours before the City Council was scheduled to award the project to a higher bidder, the firm convinced the City to rescind their bid rejection and recommend that the City Council award the project to the firm’s client. The firm’s client was awarded the project.

Counsel: P. Randolph Finch Jr. and Dustin R. Jones

2010: The firm drafted and successfully aided the passing of legislation permitting California limited liability companies to possess California contractor's licenses. Senate Bill 392 fundamentally revised California's Contractors State License Law and authorizes the California Contractors State License Board to begin issuing contractor's licenses to limited liability companies no later than January 1, 2012. Senate Bill 392 allows contractors for the first time to take advantage of the management and tax benefits of organizing as a limited liability company, an advantage advocated by the firm's transactional and estate planning practice groups for the construction industry.
Counsel: P. Randolph Finch Jr., David S. Demian, and Rod F. Moreira

2010: The dispute involved installation of casework at a local school district. After terminating the casework subcontractor, the subcontractor sought $61,650.00 plus attorneys’ fees for alleged project acceleration and nonpayment. The firm represented the general contractor and was successful in compelling the claim to arbitration. Prior to arbitration, the firm successfully negotiated a settlement agreement with no liability or amount owed by the firm’s client.

Counsel: Jeffrey B. Baird and Daniel P. Scholz

2010: The firm's client was the general contractor charged with expanding and renovating a large retirement community. The project was delayed for more than one year. The parties disputed liability for the delay. The owner sought over $1.5 million in liquidated damages from the general contractor. A five day arbitration resulted in the firm successfully defending the owner's delay claims and the litigation resulted in a net recovery for the firm's client.

Counsel: Jeffrey B. Baird, David W. Smiley, and Christopher R. Sillari

2009: The firm represented six clients with claims for payment on a private 500 unit development project and related public improvements located in Brawley, California. Despite an insolvent developer, the firm recovered nearly $6 million for its clients, with three site improvement contractors each recovering in excess of 100 percent of their principal claims. The firm pursued litigation for recovery on public works payment bond, mechanic’s liens, bonded stop notices, breach of contract, and related causes of action against the project owner, construction lender, homeowners, and bond sureties. The case concerned a $35 million construction loan which the lender ceased funding as the project property value fell to less than $4 million. The firm successfully argued that the borrowing base credit line theory claimed by the construction lender to cease funding and paying contractors was invalid and did not absolve the lender of liability on either stop notices or mechanic’s lien claims.

Counsel: P. Randolph Finch Jr. and Allison N. Cooper

2009: The firm represented a subcontractor in litigation arising from the construction of a large wastewater treatment plant in North San Diego County. The firm initiated a lawsuit on behalf of the subcontractor against the design-build-operate contractor who had not paid the subcontractor in full for contract work performed. The subcontractor also sought damages for disruption to its work, resulting in labor inefficiency, and for change order work for which it had not been paid. The design-build-operate contractor disputed the subcontractor's claim and asserted a cross-complaint in the lawsuit against the subcontractor seeking affirmative relief. After a two-week jury trial, the jury returned a verdict in favor of the firm's client in the amount of $443,884.26. The firm's client then asserted post-verdict claims for interest, costs, and attorneys' fees, and was paid $750,000.00.

Counsel: Jason R. Thornton and Justin M. Stoger

2009: The firm initiated a multi-party construction defect action on behalf of the City of Indian Wells as owner of a multi-unit affordable senior housing complex. The firm sued the prime grading contractor, prime building contractor, their performance bond sureties, the architect, soils engineer, and others for damages for construction defects relating to soils settlement. The defendants each alleged they did not cause the damage, the deeper soils issues were the cause of settlement, and that the City’s damages were not as extensive as claimed. The Firm defeated a motion for summary judgment by the prime grading contractor’s performance bond surety contending the damages and claim occurred in excess of one year from completion. After more than a year of litigation, the firm recovered $9,129,725.00 for its client via settlement.

Counsel: Louis J. Blum

2009: The firm initiated litigation on behalf of a pipeline rehabilitation subcontractor on a City of San Diego Metropolitan Wastewater Department sewer rehabilitation project. The firm sued the general contractor, its payment bond surety, and the project owner to recover the principal amount due of $270,000.00 via claims for breach of contract, recovery on payment bond, and recovery on public works stop notice. The general contractor alleged it was entitled to an offset from subcontractor due to delays on the project and liquidated damages assessed by the owner. One month before trial, the firm recovered $336,000.00 for its client via settlement, more than the principal claim.

Counsel: P. Randolph Finch Jr. and Andrea L. Petray

2009: A trade contractor on a public works new high school construction project filed suit against the firm’s construction manager client for breach of contract as an alleged third party beneficiary and negligence seeking in excess of $3.8 million dollars for alleged contract balance and delay and disruption damages. Following nearly two years of litigation and after the court granted the firm’s summary judgment and summary adjudication motions, the District and trade contractor settled with no contribution by the firm’s client.

Counsel: P. Randolph Finch Jr. and Andrea L. Petray

2009: The firm represented a contractor against a defaulting subcontractor for breach of contract and indemnity relating to its work on a public work of improvement. During the project the contractor obtained the consent of the public agency to substitute its listed subcontractor with another subcontractor. At the end of the project the replacement subcontractor’s supplier sued the subcontractor and the contractor’s payment bond. In the action initiated by the firm against the subcontractor for breach of contract and express indemnity, the subcontractor moved for summary judgment arguing that its contract with the contractor was void because the public agency failed to give the original subcontractor notice of the substitution and an opportunity for a substitution hearing. The trial court granted the motion for summary judgment and the firm appealed the decision to the California Court of Appeal on petition for writ of mandate. The Court of Appeal agreed with the firm that the contract was valid because the failure to comply with the notice and hearing requirements of the Public Contract Code was not caused by the contractor who obtained public entity consent. Accordingly, it reversed the summary judgment order and allowed the contractor to proceed to trial on its breach of contract and express indemnity claims against the defaulting subcontractor.

Counsel: Jason R. Thornton and David W. Smiley

2009: The firm initiated litigation on behalf of the electrical subcontractor on the Metropolitan Transit System’s light rail construction project which extended the San Diego Trolley system to eastern portions of San Diego County. The project had been severely delayed and disrupted and the firm filed suit to recover: (1) subcontract balance held by the general contractor based on a liquidated damages claim asserted by the owner; and (2) delay and disruption damages incurred by the electrical subcontractor. The firm recovered, via settlement, in excess of 100 percent of the subcontractor’s principal delay and disruption damages from the owner and the entire subcontract balance from the general contractor. The firm’s client avoided what became a multi-month jury trial between the owner and general contractor in Imperial County.

Counsel: P. Randolph Finch Jr. and Dustin R. Jones

2009: Subcontractor on a condo-conversion project was sued by general contractor for $1.2 million based on an indemnity claim for extra work paid to the general contractor’s drywall subcontractor. The firm was retained less than two weeks before the trial date and successfully moved the court for a trial by jury, and then tried the case to a 12-0 verdict resulting in no recovery for the general contractor and recovery of the firm’s subcontractor client’s entire contract balance and attorneys’ fees.

Counsel: Justin M. Stoger

2008: This case involved a challenge to the award of a track and field improvement trade package for a Riverside County public high school to the firm’s client. Based on the low bidder’s failure to list an approved synthetic track surfacing manufacturer and installer, the firm successfully protested and the District awarded the trade package to the firm’s client. The rejected low bidder then filed suit, seeking a judicial mandate that the District reverse its decision and award it the project. The firm successfully defended the lawsuit and convinced the court to adjudicate the matter on an expedited schedule, so as to allow the firm’s client to begin construction without delay.

Counsel: P. Randolph Finch Jr. and Dustin R. Jones

2008: Prime contractor on a $12.875 million four school modernization project suffered delay, disruption, and inefficiency damages as a result of unclear plans and specifications, and late completion of predecessor activities by other contractors to the District. The firm filed suit to collect the damages. Following over a year of litigation and cordial meetings with the District, its counsel, and its experts to explain the claim, the case was mediated to a settlement with the firm’s client being paid $1.2 million for delay and disruption damages, and receiving a thank you letter from the District for building a quality construction project.

Counsel: P. Randolph Finch Jr., Justin M. Stoger, and Dustin R. Jones

2008: Numerous subcontractors initiated litigation against the firm’s general contractor client and the project owner to collect subcontract balances. The firm’s client asserted the pass through claims for unpaid contract balance and for additional overhead to build the project, which was completed over one year behind schedule. The project owner countered with a delay claim and other claims. Through a series of negotiations, settlement conferences, and mediation just prior to a jury trial, the firm’s client was paid on its claim for additional compensation, and received full indemnity from the owner for all subcontractor suits.

Counsel: Nowell A. Lantz

2008: The firm’s trade contractor client sued the project owner and lender to recover $311,000.00 for improvements to the project. The firm’s client’s early litigation offer to accept $336,000.00 was rebuked by the defendants. After obtaining a pre-judgment writ of attachment and summary adjudication of its breach of contract and lien foreclosure causes of action, and attaching rents due the project owner, the case settled with the firm’s client being paid $475,000.00.

Counsel: P. Randolph Finch Jr. and Andrea L. Petray

2008: This matter involved the award of a $4 million educational building project by the Southwestern Community College District. Based on an irregularity in the low bidder’s bid amount, the firm successfully protested and the District rejected the low bid and awarded the project to the firm’s client after two public hearings conducted by the District to consider the matter.

Counsel: P. Randolph Finch Jr. and Dustin R. Jones

2008: The firm protested the award of a $19 million office building project by the Eastern Municipal Water District based on inconsistencies in the low bidder’s subcontractor listing. The Water District responded by rejecting all bids. On rebid, the Water District revised its bidding instructions to eliminate ambiguities pointed out by the firm. The firm’s client was the low bidder and awarded the contract following the rebid.

Counsel: P. Randolph Finch Jr. and Dustin R. Jones

2007: The firm represented the general contractor in disputes concerning the destruction by fire of a $1.5 million public project that was 99 percent complete. The public entity owner and its insurance carrier claimed the general contractor was contractually obligated to obtain builder’s risk insurance coverage for the loss and despite not having it, was responsible for the cost to rebuild. The firm argued the existence of duplicate coverage through a public entity risk sharing policy absolved the contractor of liability for the alleged failure to obtain insurance. Following mediation and a series of negotiations, the firm’s client avoided liability for the loss with insurance carriers paying the firm’s client to rebuild the project.

Counsel: P. Randolph Finch Jr. and Allison N. Cooper

2007: The firm protested the award of a $12 million fire station project on the basis of an irregularity in the low bidder’s bid bond. The firm succeeded and the City Council rejected the low bid and awarded the project to the firm’s client despite a significant bid spread.

Counsel: P. Randolph Finch Jr. and Dustin R. Jones

2007: Second-tier subcontractor initiated litigation to collect the contract balance on a $42 million dollar new high school project which was completed over one year behind schedule with delay and disruption claims by more than a half dozen subcontractors totaling over $8 million dollars. After serving as project counsel since 2004, the firm represented the general contractor in responding to the subcontractor claims and pursuing the owner for payment of the legitimate amount of the same, as well as the additional costs of the general contractor. Through a series of liquidation agreements, mediations, and negotiations with the owner and its counsel, the firm’s client avoided liability to the subcontractor claimants beyond the amount paid by the owner, and recovered additional compensation for its work, with the District paying the firm's client over $2.6 million dollars to resolve the consolidated lawsuits.

Counsel: P. Randolph Finch Jr. and Andrea L. Petray

2006: Two week jury trial regarding private work of improvement resulting in 9-3 defense verdict in favor of firm's client on complaint seeking disgorgement of over $800,000.00 for alleged unlicensed contractor work. Last pre-trial offer by firm’s client was to pay $5,000.00 to settle.

Counsel: Nowell A. Lantz

2006: Three week jury trial regarding private work of improvement resulting in 11-0 verdict in favor of firm's contractor client on complaint, and zero recovery on $1,000,000.00 cross-complaint of property owner opponent (including claims for punitive damages) against both contractor and project manager.

Counsel: Nowell A. Lantz

2005: Three week jury trial regarding private work of improvement resulting in 12-0 verdict in favor of firm's contractor client on complaint, zero recovery on cross-complaint of property owner opponent, and declaration that termination was for convenience, not cause.

Counsel: Louis J. Blum

2005: Bench trial of claims by subcontractor for compensation by general contractor resulting in judgment in favor of Firm's general contractor client including award of attorneys’ fees and costs against the subcontractor plaintiff of over five times the amount sought by plaintiff. 2006: Judgment affirmed by the Court of Appeals, and client awarded costs on appeal.

Counsel: Robert J. Marks and P. Randolph Finch Jr.

2005: Six day arbitration regarding public work of improvement resulting in judgment in favor of firm's contractor client on complaint against public agency owner, including award of attorneys’ fees and costs pursuant to Public Contract Code section 7107 and Code of Civil Procedure section 1021.5, and determination of wrongful withholding of retention.

Counsel: Robert J. Marks and Chad T. Wishchuk

2005: Two day arbitration regarding private work of improvement resulting in judgment in favor of firm's contractor client on complaint, and zero recovery on cross-complaint by subcontractor opponent.

Counsel: Jeffrey B. Baird

2004: Two day arbitration regarding private work of improvement resulting in judgment in favor of firm's contractor client on complaint and zero recovery on cross-complaint by property owner opponent for over $250,000.00.

Counsel: P. Randolph Finch Jr.

2003: Seven day bench trial regarding private work of improvement resulting in judgment in favor of firm's subcontractor client on complaint, and zero recovery on cross-complaint by general contractor opponent.

Counsel: Jeffrey B. Baird and Louis J. Blum

2003: Six day arbitration regarding federal work of improvement resulting in judgment in favor of firm's contractor client on complaint, and zero recovery on cross-complaint by subcontractor opponent.

Counsel: Robert J. Marks