City loses huge judgment
In the largest judgment against South Lake Tahoe in the city’s history, a Sacramento Superior Court jury on Monday awarded $2.25 million in damages to Daylight Construction, Inc.
The lawsuit stemmed from a botched T-hangar construction job at the Lake Tahoe Airport, which began in June 1994. The city filed suit against the Sacramento-based company for failure to complete the project, and the company subsequently sued the city for breach of contract.
Both lawsuits were condensed into one civil trial, which took place during the last four weeks in Sacramento, and the jury ruled unanimously in favor of Daylight.
City officials say they are both shocked and outraged at the verdict and intend to appeal the decision upon approval from the City Council, which is scheduled to discuss the issue on April 15.
“The size of the judgment is not only unreasonable, it is ludicrous that any judgment was made against the city in this case,” said Mayor Tom Davis. “This is another example of a jury rendering a verdict clearly in contradiction of the facts presented.”
If the Superior Court’s verdict is upheld by the District 3 Court of Appeal, the city would have to pay the $2.2 million, but could do so over a period of up to 10 years, said Bob O’Connor, one of the attorneys representing the city.
That translates into a $225,000 annual payment out of the city’s general fund. In light of the city’s projected $1.4 million long-term budget deficit, that money would be difficult to find.
“The jury’s verdict and the jury’s interpretation of evidence presented in the case is a major miscarriage of justice,” said Kerry Miller, city manager. “We will do everything we can to make sure justice is rendered, and that the citizens of this community do not have to pay the price for the incompetence of a bad contractor.”
But Steven Plant, president of Daylight Construction, said he is thrilled with the jury’s decision and does believe that justice was served.
“We feel like we’ve been vindicated with this verdict, and we would like people to know the truth,” Plant said on Monday. “Everybody we used to work with thought we were flakes, so we want to have the opportunity to set the story straight as far as what happened.”
The city hired Daylight Construction in June 1994 to design and build 48 T-hangars – structures that house private aircraft. Daylight hired a consultant and subcontracted with another company to complete the design aspect of the project.
The plans for the hangars were apparently received late, and the city would not allow Daylight to construct the hangars until a design was in place.
By that time, in October of 1994, severe weather delayed the project further, making Daylight unable to pay its subcontractors and suppliers, and eventually causing the company to go broke.
But the source of the controversy lies in what type of concrete slab – sloped or flat – was to be included in the hangar project.
Thomas Cooper, Daylight’s attorney, alleges that the city agreed to an original plan to have flat slabs and then later changed the contract to require sloped slabs.
“The contract required construction to be done pursuant to one set of plans, and the city wouldn’t allow the initial standard plan (including flat slabs) to be used,” he said.
This “change” made the project unbuildable, he said.
However, the city maintains that the company knew from the beginning what the contract required, and created the breach of contract allegation only after attorneys became involved.
“This whole notion that the contract was changed because the slab designs were changed was completely and utterly a creation by Daylight’s lawyers,” O’Connor said. “The requirement for sloped slabs was a part of the contract from the very beginning. That was never an issue with Daylight during construction, and not once was that ever complained about.”
The city claims that because Daylight signed the contract for the design and the construction of the hangars – which included a requirement for sloped slabs – the company simply did not follow through on its contract.
The city’s lawsuit was for about $400,000 in liquidated damages, for failing to meet the city’s Oct. 13 deadline. Daylight’s $2.2 million award represents reasonable costs the company spent trying to complete the project, over and above the $1.07 million paid to them by the city, and Daylight’s anticipated profit on the job.
O’Connor said he believes the city has a very good chance of getting the ruling overturned on appeal.
“An overwhelming weight of the evidence was in the city’s favor,” O’Connor said. “The reason articulated by the jury (for their verdict) was the flat vs. sloped floor issue. If that was the basis of the jury’s decision, it is clearly not only contrary to the evidence but contrary to the expressed provisions of the contract.”
Support Local Journalism
Support Local Journalism
Readers around the Lake Tahoe Basin and beyond make the Tahoe Tribune's work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Your donation will help us continue to cover COVID-19 and our other vital local news.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User