Thursday, August 18, 2011

Appeals Court Rules On Suit Over Long Beach Port Fire Station Work

A California state appeals court ruled Tuesday upheld a 2009 lower court decision that a Thousand Oaks, Calif.-based contractor was not entitled to damages or legal fees over a case springing from the construction of a fire station at the Port of Long Beach.

The appeal case stems from a Union Excavating, Inc. (UEI) suit filed in July, 2008 against port fire station prime contractor DJM Construction Company (DJM) alleging breach of contract and quantum meruit (payment for services rendered).

The port awarded DJM the $6.4 million contract for the construction of the port's Fire Station 24 in November 2006, and the 6,300-square-foot station was completed in March 2008. The first new fire station at the port in more than 20 years, Fire Station 24 was officially dedicated in May 2008, coming in at a total cost of $11.7 million.

UEI alleged in the original suit that in late 2007 it had entered into a verbal contract with DJM to furnish labor, equipment and materials to DJM for the fire station project. Following work completed in November 2007, UEI presented invoices to DJM totaling $122,500, which DJM refused to pay.

DJM said during the lower court trial that it thought it had hired UEI on a "time and materials" basis and that UEI would complete the work for "a payment not to exceed $55,000."

UEI maintained the total value of the work performed was approximately $129,000; DJM maintained it was approximately $80,000.

After a five-day trial in October 2009, the lower court ruled that no contract existed between the two firms, UEI was entitled to be paid for its services, and entered a judgment in favor of UEI in the amount of $112,000.

However, UEI objected to the decision, asking the lower court to also include statutory penalties, attorney fees, and costs in the award amount.

The lower court disagreed with UEI and in December 2009, filed a judgment awarding UEI $112,000 and stating that UEI was not entitled to "prejudgment interest or attorney fees."

UEI filed with the state appeals court, arguing that the lower court erred in not awarding interest, penalties and attorney costs.

In the ruling filed Tuesday, the appeals court pointed out that nether UEI or DJM maintain that the lower court was incorrect in determining that no formal contract existed between the two parties.

However, the ruling stated, if no formal contract existed, and UEI was only being awarded payment for services rendered under quantum meruit, UEI could not simultaneously claim additional "penalties, attorney fees and costs" that were premised on the existence of a contract between the two parties.

The appeals court concluded that the lower court did not err in its decision and upheld the original $112,000 award to UEI.