General Contractor vs. Sub-Contractor Claim Resolution
May 2019
Client: Jeffrey Hood, Partner, Procopio, San Diego, CA
Expert: Ted Bumgardner
It has been an unbelievably busy season for Xpera’s construction forensics team, with several active cases recently coming to successful conclusions.
One of these cases involved a leading general contractor in a drawn-out contract dispute with one of its subcontractors over the construction of a new timeshare project in Big Bear, CA. The general contractor was represented by Jeff Hood, a partner with Procopio’s construction litigation practice in San Diego.
The general contractor had hired a single subcontractor to perform framing, structural steel and concrete work (yes, you read that right). The general contractor contended that the subcontractor had significant manpower and quality of work issues on the project, and after failing to cure the problems as directed, the subcontractor was terminated.
In order to get the project back on track, the general contractor needed to hire several different subcontractors to complete the work of the original subcontractor, as well as fix all of the work that was deemed deficient.
In the end, the general contractor contended it was owed roughly $3.9 million in damages. The subcontractor filed a counter claim, asserting they were owed roughly $1.8 million for the contract balance, change order work and other damages.
While the subcontractor was terminated in 2015, the two parties had been unable to come to a resolution on the matter and in late-2018, the case went to trial in San Bernardino County Superior Court.
“One of the biggest challenges we had was substantiating the cost to complete and repair,” said Hood. “The original contract value for the work was about $1.7 million. We were seeking damages that were two and half times that amount. We understood that was going to be a tough hurdle to overcome with the jury and we needed a strong expert to weigh in on the evidence.”
Hood turned to construction expert, Ted Bumgardner, with whom he has worked on a wide range of construction-related cases over the years.
Bumgardner was asked to review and evaluate the work that was done and the work that remained, and openly testify to the reasonableness of the costs incurred.
This was no small task, given the scope and magnitude of the project, as well as the time that had passed since the dispute first began.
It involved a painstaking process of tracking what the new subcontractors were doing on a daily basis and documenting whether each task was new work, repair work or extra work, in order to ascertain that all of the costs were allocated appropriately.
“The challenge with cases like this is really getting down into the weeds, essentially reconstructing the project piece by piece, sometimes years after the fact,” said Bumgardner. “It is critical to get all the documentation in order so that we can truly understand what happened. Not only that, but we need to be able to digest all those weedy, highly technical details and be able to communicate them in such a way that a jury of non-industry people can understand it and make an informed decision.”
Based on Bumgardner’s review of the costs, as well as the testimony of various witnesses, he opined that the bulk of the costs that were incurred were reasonable. Additionally, he found the method and manner in which the general contractor completed and fixed the work were also reasonable.
After a seven-week trial, the jury ultimately agreed, awarding the general contractor approximately $3.8 million—96% of the damages that were requested. The subcontractor received nothing in its counter claim.
“I have worked with Ted for a long time and he’s always great at evaluating and opining on cost, cost for repair and the methods for how to get there,” said Hood. “He did another great job with this case and we’re pleased to have been able to secure this verdict for our client.”
Congratulations to Jeff Hood and his team for this extraordinary outcome!
Learn more about this project and other expert solutions offered by VERTEX here.
This article was originally published by Xpera Group which is now part of The Vertex Companies, LLC.