Tutor-Saliba-Perini J.V. v. L. A. Cnty. Metro. Transp. Auth.

Decision Date16 June 2014
Docket NumberB237037,B232372
CourtCalifornia Court of Appeals Court of Appeals
PartiesTUTOR-SALIBA-PERINI J.V. et al., Plaintiffs, Cross-defendants and Appellants, v. THE LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY et al., Defendanst, Cross-complainants and Appellants. TUTOR-SALIBA-PERINI J.V. et al., Plaintiffs, Cross-defendants and Appellants, v. THE LOS ANGELES COUNTY METROPOLITAN TRANSPORTATION AUTHORITY, Defendant, Cross-complainant and Respondent.


California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County

Super. Ct. No. BC123559

c/w BC132928) APPEALS from a judgment and postjudgment orders of the Superior Court of Los Angeles County, Carolyn B. Kuhl, Judge. The judgment in favor of the People of the State of California on the UCL claim is reversed. The postjudgment order denying the Sureties' motion for attorney fees is reversed and the matter remanded for a determination of the reasonable amount of attorney fees to which they are entitled. In all other respects the judgment and postjudgment orders are affirmed.

Castle & Associates, Nomi L. Castle, David Romyn, Robert Nida, for Plaintiffs, Cross-defendants and Appellants, Tutor-Saliba-Perini, J.V., Tutor-Saliba Corporation and Perini Corporation.

Castle & Associates, Nomi L. Castle, David Romyn, Robert Nida; Horvitz & Levy, Barry R. Levy and Frederic D. Cohen, for Plaintiffs, Cross-defendants and Appellants, Fidelity & Deposit Company of Maryland, North American Reinsurance, Aetna Casualty & Surety Company.

John Krattli, County Counsel, Charles M. Safer, Deputy County Counsel; Jones Day, Elwood Lui, Daniel D. McMillan and Jeffrey B. Kirzner, for Defendants, Cross-complainants and Appellants, The Los Angeles County Metropolitan Transportation Authority et al.

Tutor-Saliba-Perini, J.V. and its joint venture partners Tutor-Saliba Corporation and Perini Corporation (collectively TSP),1 on the one hand, and the Los Angeles County Metropolitan Transportation Authority (MTA), on the other, have engaged in contentious litigation for nearly two decades arising from disputes over TSP's performance as one of the prime contractors on the Metro Red Line subway project. In 1995 TSP sued MTA for breach of contract, seeking $16 million in additional compensation based on 35 claims under four separate contracts. In 1999 MTA filed a cross-complaint for breach ofcontract and violations of the false claims act (FCA) (Gov. Code, § 12650 et seq.) and the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.). MTA's initial 2001 judgment against TSP for $60 million was reversed by this court in 2005. (Tutor-Saliba-Perini, J.V. v. Los Angeles County Metropolitan Transit Authority (Jan. 25, 2005, B143430, B158407) [nonpub.] (TSP I).) After five more years of protracted proceedings in the trial court, MTA prevailed after a bifurcated jury trial on two breach of contract and FCA claims relating to subway tunnel handrails; the People of the State of California (State), who were allowed to substitute in place of MTA in pursuing the UCL cause of action, were awarded a civil penalty of $2,500; many of the remaining claims and cross-claims were dismissed through pretrial rulings in so-called Cottle proceedings; others were withdrawn or abandoned; and MTA consented to judgment being entered in favor of TSP on the remaining contract claims. The court entered a net judgment of $3 million in TSP's favor.

TSP appeals the relatively small award against it under the FCA relating to tunnel handrails ($334,953.48), explaining any false claim penalties can have a significant, negative impact on future bids for public works contracts. TSP also appeals from the grant of nonsuit on its claim relating to extra costs incurred by the elimination of night construction and the trial court's issue sanction that barred TSP's street restoration and project completion delay claims. TSP also contends the trial court failed to follow this court's mandate in TSP I to enter judgment in its favor on the UCL claims and erred in permitting the State to substitute for MTA.

MTA and the State have cross-appealed from the nonsuit ruling on their claims against TSP under the FCA and UCL and for breach of contract to recover payments made pursuant to change orders involving reduction in the permissible noise levels for night work, contending the trial court improperly resolved questions of fact regarding scienter and materiality. However, in their cross-appellants' reply brief MTA and the State expressly label their cross-appeal on the night restriction claims as "protective," urging this court to bring the litigation to a close and disclaiming any interest in a reversalof that nonsuit ruling unless we reverse the rulings against TSP and remand the matter for further trial.

In a separate, but related, appeal TSP and the issuers of its public works bonds—Fidelity & Deposit Company of Maryland; North American Reinsurance, currently doing business as Swiss Reinsurance America Corporation; and Aetna Casualty & Surety Company, currently doing business as Travelers Casualty & Surety Company (collectively the Sureties)—appeal from the order denying their joint motion for attorney fees. We advised the parties we would consider the appeals together for purposes of oral argument and decision.

We affirm the verdict and award in favor of MTA on the tunnel handrail claims, reverse the award in favor of the State on the UCL cause of action, and reverse the postjudgment order denying the Sureties' motion for attorney fees and remand for a determination of the reasonable attorney fees to which they are entitled. In all other respects we affirm the judgment and postjudgment orders of the trial court, including its denial of TSP's motion for attorney fees.

1. TSP's Complaint; MTA's Cross-complaint; the First Trial; and TSP I

As the lowest responsible bidder, TSP was awarded the prime contracts for three adjacent Metro Red Line stations and tunnels along the Wilshire corridor, designated B211, B221 and B231. Each contract required TSP to fully perform for a fixed price equal to its low bid, subject to reimbursement for additional costs arising from any material changes to the contract including delays caused by MTA, undisclosed geologic conditions, acts of God and subsequent MTA modifications to the project plans upon which TSP based its bid. To receive such reimbursement, TSP was required to prepare "change orders," which were submitted for approval to MTA's outside construction manager (Parsons Dillingham) and MTA staff.

Other than with respect to the issue of attorney fees, this appeal involves only the B221 contract for construction of the subway tunnel between Wilshire/Vermont andWilshire/Western and the subway station at Wilshire/Normandie and several related structures. Although a substantial number of TSP's change-order claims for the B221 contract were paid by MTA, totaling millions of dollars, others were disputed and became the subject of TSP's 1995 lawsuit for breach of contract and breach of implied warranty, which, as filed, also included claims involving the B211 and B231 contracts and sought recovery of more than $16 million for disputed change orders that MTA considered improper.2

In early 1999, after the parties had announced ready for trial, MTA was granted leave to file a cross-complaint against TSP alleging breach of contract and violations of the FCA and UCL. The theory underlying MTA's cross-complaint was, in large part, that TSP had deliberately underbid the contracts in order to have the lowest responsible bid, while always intending to submit a substantial number of specious change orders to recoup its real costs and generate a sizeable profit. The cross-complaint also sought to recover on public works bonds from the Sureties, which were named as cross-defendants.

The numerous discovery battles between TSP and MTA before and after the filing of the cross-complaint are detailed in TSP I. As we explained, ultimately the trial court imposed pretrial monetary and issue sanctions against TSP and its counsel Castle & Lax based on their failure to provide discovery. In addition, the court granted a series of motions for summary adjudication pursuant to Code of Civil Procedure section 437c, subdivision (f)(1), directed to a number of the specific claims for reimbursement made by TSP within its causes of action for breach of contract and breach of warranty, eliminating more than 80 percent ($13 million) of TSP's affirmative claims. Then, during the eighth week of a jury trial on TSP's remaining claims and on MTA's cross-complaint, MTA moved for terminating sanctions based on apparent additional discovery violations. After giving TSP a limited time to respond, the court granted the motion for full terminatingissue and evidentiary sanctions: "The facts shall be taken as established that there is no liability on the part of MTA on any of the causes of action by TSP against MTA in its pleadings. [¶] The facts shall be taken as established that the cross-defendants are liable to MTA as to each cause of action alleged in the pleadings of cross-complainant. [¶] . . . [T]he Court is imposing an evidence sanction prohibiting TSP and the cross-defendants from offering any documentary evidence regarding the damages alleged by MTA. [¶] Plaintiff and Cross-Defendants may call witnesses, cross-examine witnesses and argue the issue of damages to the jury but may not make use of any documentary evidence."

Following issuance of the trial sanctions order, trial continued with MTA presenting evidence on its cross-complaint, largely through the testimony of...

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