Construction company sues PAUSD

$3.5 million lawsuit arises over accusations of breach of contract during the construction of new buildings

Taisei Corporation sued Palo Alto Unified School District, for $3.5 million in compensation, alleging breach of contract during construction of the high school’s two math and media arts buildings.

According to a Palo Alto Weekly article, Taisei’s lawsuit was filed in June 2013 after PAUSD refused to pay the $1.6 million Taisei requested in an earlier complaint in April 2013. Taisei’s suit includes additional expenses the company claims to have spent as a result of the distict’s changes to construction plans.

Mentioned in the article, the suit claims that “incomplete plans, unbuildable design elements and uncoordinated sections of the plans required the company and its subcontractors to repeatedly slow or stop work and, in some cases, remove and replace completed work.”

The architecture firm that designed the buildings, Deems Lewis McKinley, is also being sued for “tortuous interferences with contract relations.”
Taisei is claiming that PAUSD did not follow through with their standard of care.

“We already have several experts who have come forth to say that not only the architect failed to meet his standard of care, the district also failed to meet their standard of care,” Taisei’s Operations Risk Manager Jaysen Van said.

The Palo Alto Weekly states that the suit, filed on the planned date of construction completion, didn’t became apparent to the district until July because Taisei served them in an untimely fashion. Taisei also made three changes to their suit during the duration of construction. The suit has been rejected by both the district and the architecture firm. Claiming a lack of support for Taisei’s claims, the district’s attorneys have denounced Taisei’s argument of “unclean hands.”

The attorneys on PAUSD’s side believe that Taisei is not entitled to compensation because they are guilty of wrongdoing of their own. This wrongdoing illegitimizes Taisei’s claims of breach of contract on PAUSD’s part. The district’s attorneys, from law firm Dannis Woliver Kelley, justified the district’s actions and delayed mediation.

According to Palo Alto Weekly, PAUSD claimed that “Taisei has failed to state sufficient facts to constitute a cause of action against the district and to exhaust its administrative remedies for its claim against the district.”

Gilbane, the attorney for the construction manager PAUSD worked with, wrote in court documents that Taisei’s claims “constitute nothing more than a superficial attempt to classify the normal contractual duties of a construction manager, as torts, solely on the basis that such services may have had an adverse effect on Taisei’s bottom line.”

The construction manager does not blame or conflict with PAUSD in this case.

Despite PAUSD’s strong rejection of the suit, Taisei continues to hold a solid argument. With more detail, Van claimed the majority of the delay was due to the delayed installation of hydronic piping, which was postponed for one year and cost Taisei $1 million in changed plans. Although the district paid for the pipes, Taisei hasn’t been compensated for the delay, which required six new subcontractors to be hired.

While the district argues that Taisei’s claims are unsupported, and its own actions justified, Taisei continues to demand compensation for the extensive and constantly changing plans for construction. Taisei blames not only PAUSD, but also the architecture firm and the architect for their lost time and thier lost money. Both PAUSD and the architecture firm reject these claims and blame Taisei for misconduct during the construction process.

With both parties holding strong arguments, the suit will be long and will have many amendments, reflecting the nature of the process of construction currently being debated. It is not likely that a resolution of any sort will arise soon.