City of Fresno Sues Mauldin Dorfmeier Construction for Millions

* Fresno claims in a lawsuit that breaches of contract by Mauldin-Dorfmeier Construction, Inc. (“MDC”) incurred approximately $2.5 million in damages born by the City.
* The City additionally alleged that MDC made false claims for project payments. The complaint noted three allegedly false claims that totaled more than $450,000. As triple damages apply under state statute, MDC could be liable for up to approximately $1.4 million.
* Additional pending Fresno-Yosemite airport-related complaints allege MDC responsibility for damages in excess of $700,000.
* Other major MDC projects in Fresno have proceeded haltingly or under close, expensive scrutiny.
* The website "EYEonMDC.org," designed by the Carpenters Union to hold the central San Joaquin Valley's #1 public works contractor accountable to the public, is an easily accessible information resource.

Rough landing for Fresno-Yosemite airport expansion project
The Fresno City Council directed the City Attorney on February 24, 2004 to initiate litigation against Mauldin-Dorfmeier Construction Inc. ("MDC") and related parties for breach of contract and for submitting false payment claims After months of discussions between council members and staff(1) and a report by the Fresno County Grand Jury, attorneys for the City filed suit on March 2nd.(2)
The City says that MDC failed to act reasonably to mitigate causes of delay and disruption to the project and engaged in “inflammatory conduct.” As a result of MDC’s alleged breaches of the industry standard of care for construction services, the City has had to pay excess administration expenses, pay to correct non-conforming work, and deal with additional claims from the project architect, construction manager and testing/inspection consultant. MDC has failed to perform its contractual duty to defend and hold the City harmless from claims made upon the City by the Project architect, construction manger, and testing/inspection consultant, the City says.
Members of the Fresno-based Carpenters union, Local 701, had expressed support for the August 2003 Fresno County Grand Jury recommendation that the City “aggressively pursue” such claims for damages.
A court decision favorable to the City could result in a judgment of up to $4 million against MDC, the Carpenters Union concludes from a review of the complaint. Other companies that worked on the airport concourse & terminal expansion project had filed separate suits earlier in Fresno county superior court against MDC. Two of those suits, with combined damages claims totaling over $700,000, remain pending.(3) Other suits against MDC recently were settled out of court.(4)
Fresno-Yosemite International Airport Terminal Expansion project background
Construction of the airport terminal & concourse began in July 2000; it was scheduled to be completed in February 2002. Problems with the project covered by the Fresno Bee included: construction quality; questionable decision-making; poor teamwork; construction delays; disputes with subcontractors; mounting project costs; probable future litigation; and a successful lawsuit against the City for its award of the prime contract to MDC instead of to the low bidder. Project-related records that can be found on EYEonMDC.org provide the following background:

* “The local contractor, Mauldin Dorfmeier, bid the project. They are supposed to build it on time and within budget. That is their job. They have not done that,” said Fresno’s City Manager, Daniel Hobbs, in a March 2002 report to the Council.
* The City has retained almost $1 million in liquidated damages plus millions more in “other deductions.”
* Harris & Associates sued in September 2003 for the revocation of MDC’s contractor’s license, alleging that MDC violated California’s Business and Professions code and failed to pay $229,000 it owed Harris. Dupont Commercial Flooring sued MDC in December 2003 for $490,000.
* “[T]he Project Manager and [the Construction Manager] estimated as many as 150 steel fabrication and fit-up (installation) errors,” the City Manager reported.
* “[S]tronger, more experienced MDC management needs to be implemented on this project team to perform the detailed scheduling, coordination and subcontractor management required to meet the proposed schedule,” the project’s architect and engineering firm said.
* MDC would have had to “triple [its] recent performance” rate in order to complete work according to construction schedule revision agreed to in March 2002, construction manager Parsons Brinckerhoff said. MDC had, to that date, chosen to perform work on a single-shift, five-day workweek basis with minimal overtime.
* MDC’s lawyer asserted in 2002 that the contractor “has and continues to prosecute this work consistent with the contract documents.” The City disputed MDC's contention that Owner changes caused a delay to substantial completion of the project.

Guarding against other MDC project problems?
* The City of Fresno committed $445,000 to contract two engineering firms to keep the Surface Water Treatment Plant contract with MDC on schedule and to document departures from the original contract documents.5 The City also assigned an inspector to monitor the project full-time.
* MDC is the Design-Build contractor for the “AB Parking, LLC” facility at 1140 Broadway in Fresno, a project covered by a Disposition and Development Agreement with the City Redevelopment Agency. The RDA, which sold the land to AB Parking for $1, was to have recouped the site’s value and lost bond revenue through property taxes and revenues from parking fees for events at Grizzly stadium. The D&DA mandated project completion by December 2002. Failing timely completion, the Agency is entitled to terminate the Developer’s title and retake title. Presently only one floor of the structure out of six is available for parking, due in part to issues with the structure’s ventilation, a City inspector said.
* The Carpenters Union is concerned about public safety and urges inspection of the MDC design-built parking structure at River Park shopping center. The structure’s upper deck exhibits gaping cracks and sagging of some sections. (a brief video is available from the Carpenters)

ENDNOTES
(1) A record of the Fresno City Council's consideration of litigation first appeared in the April 22, 2003 minutes.
(2) Attorneys listed on the complaint were G. Christian Roux and Kevin Collins from the firm of Weston, Benshoof, Rochefort, Rubacava & MacCuish, LLP (tel: 213-576-1000) and, from the office of the City Attorney, Hilda Cantu Montoy and James C. Sanchez (Tel: 559-621-7500).
(3) Pending suits include: Harris & Assoc vs. Mauldin Dormeier [sic]; and Dupont Commercial Flooring Systems, Inc. vs. City of Fresno, et al. [including Mauldin-Dorfmeier Construction, Inc.]. Copies of the complaints are available from the Carpenters.
(4) Suits settled recently include: Rental Service Corp vs Engineered Glass; Atlas Plastering, Inc. vs Mauldin Dorfmeier; Pacific Erectors, Inc. vs Mauldin-Dorfmeier. Case numbers and links to docket information available at EYEonMDC.org
(5) See Staff reports to Council, August 26, 2003.


Information and opinions contained in this Research Note are based on construction industry experience and on information we believe to be accurate. Anyone having dealings with any private person named herein should consult with qualified persons and/or public authorities, as Carpenters Union representatives are neither lawyers, certified building inspectors, nor structural engineers.