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Cz
TO: BOARD OF SUPERVISORS, as governing body of Contra Costa County Flood
Control and Water Conservation District
FROM: COUNTY COUNSEL
DATE: May 2, 1996
SUBJECT: Settlement of Litigation
Drainage Area 10, LineG Culvert Replacement Project, Danville Area
SPECIFIC REQUEST(S) OR RECOMMENDATIONS) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
1. APPROVE settlement of Ayala Boring, Inc. V. V&M
Construction/Backhoe, et al. , and other related litigation
involving stop notices and construction claims filed on the
above-described project.
2 . AUTHORIZE County Counsel's Office to take all steps necessary
to finalize the agreed settlement.
FISCAL IMPACT
No impact on General Fund. Settlement would require release of
$9,500. 00 in liquidated damages previously withheld by the District
and payment of $5,500. 00 in additional compensation. Additional
compensation would be covered by 10% contingency fund already
approved for this project.
BACKGROUND/REASONS FOR RECOMMENDATIONS
In June 1994, the District awarded a construction contract to V&M
Construction/Backhoe ("V&M") . The contract, which was for
$274, 320. 00, involved the boring and jacking of a large concrete
culvert under Danville Boulevard in the Danville area.
Toward the end of the job, the District received stop notices from
a number of subcontractors and suppliers who had not been paid by
V&M. Most of the stop notices were paid by V&M's bonding company,
American Bonding Co. ("ABC") . However, four stop notice claimants
filed lawsuits to enforce their stop notices, and two of
those—Ayala Boring, Inc. ("Ayala") and San Jose Concrete Pipe Co.
("San Jose")—remained unresolved.
At the end of the job, there was $133,780. 30 available for payment
to V&M or its creditors. This consisted of the remaining contract
balance ($148,280. 30) less deductions for liquidated damages (29
days x $500/day = $14,500.00) . Because the available funds were
insufficient to pay all of the claims, the District filed an
interpleader and deposited the available funds ($133, 780. 30) with
the court. This action was authorized by the Board on August 2,
1995.
CONTINUED ON ATTACHMENT: X YES SIGNATURE
_RECOMMENDATION OF COUNTY ADMINISTRATOR _RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE($):
ACTION OF BOARD ON May 79 1996 APPROVED AS RECOMMENDED OTHER_
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
X UNANIMOUS (ABSENT ► AND ENTERED ON THE MINUTES OF THE BOARD
OF SUPERVISORS ON THE DATE SHOWN.
AYES: NOES:
ATTESTED: PHIL BATCHELOR,CLERK OF THE BOARD OF SUPERVISORS
ABSENT: ABSTAIN: AND COUNTY ADMINISTRATOR May 7, 1996
Contact: David F.Schmidt(510)335-1818 •
cc: CAO
Public Works BY DEPUTY
County Counsel
County Auditor-Controller
In addition to the stop notice lawsuits, V&M filed a lawsuit
alleging various construction claims. These claims included claims
for additional compensation and time extensions due to a staking
error, an alignment conflict, buried wooden piers, the preservation
of two trees and the relocation of dirt. These claims totaled
$56, 060. 61.
At an issue conference and settlement conference held on April 30,
1996 in the Contra Costa Superior Court, a settlement has been
reached with V&M, Ayala, San Jose and ABC. The settlement, which
was entered on the record, would involve the payment by the
District of $5,500.00 in additional compensation and the granting
of a 19-day time extension. The additional compensation would be
fully covered by the 10% contingency fund ($27,432. 00) which has
already been approved for this project. The time extension would
result in the rebate of 19 days of liquidated damages ($9,500. 00)
which had previously been withheld by the District. The remaining
$5, 000. 00 in liquidated damages withheld by the District are
sufficient to cover the District's actual expenses for the late
completion of the contract. As part of the settlement, the
District and Public Works Department would be dismissed with
prejudice from all lawsuits relating to this project.
The County Counsel's Office had discussed the settlement with the
Public Works Department, which administered the construction
project. Considering the potential exposure to the County from the
construction claims, as well as imminent trial expenses if the
lawsuits are not resolved, both departments believe that the
settlement is in the District's best interest and recommend that it
be accepted.
CONSEQUENCES OF NEGATIVE ACTION
The lawsuits would proceed at additional expense to the District,
with a jury trial scheduled to begin on May 13 , 1996. Most of the
District's expenses would not be recoverable,, even if the District
wins the lawsuits. If it is determined that the District is
responsible for the construction claims, the potential exposure
could exceed $60, 000. 00.
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