Jason R. Thornton

The firm represented a general contractor in a dispute with a subcontractor on a public works construction project.  Disputes arose because the subcontractor failed to provide certified payroll documentation, bonds, and failed to meet schedule requirements.  Due to these problems, the general contractor withheld funds from the subcontractor.  The subcontractor sued the general contractor and its sureties for breach of contract, fraud, and prompt payment penalties.  As part of its claim, the subcontractor asserted a claim for over $8 million in lost profits allegedly caused by the general contractor.  During litigation, the firm discovered the subcontractor’s California contractor’s license had been suspended during a period of the project because the subcontractor had let its workers’ compensation coverage expire and had failed to obtain new coverage. Unbeknownst to the general contractor, the subcontractor worked without insurance, exposing both its employees and the general contractor to significant risk. The subcontractor was able to obtain a meaningless workers’ compensation insurance policy years after the work had been performed and convinced the California State License Board (CSLB) to retroactively reinstate its license.

The case proceed to trial.  At trial, the firm was able to prove the license reinstatement request to the CSLB was fraudulent.  The subcontractor claimed its lack of workers’ compensation insurance was due to circumstances beyond its control.  However, the firm proved coverage had been cancelled because of a payment dispute between the subcontractor and the workers’ compensation insurance carrier.  Further, the firm proved the subcontractor knew its coverage was canceled and its license was suspended by the CSLB, but continued to perform work on the project with a suspended license and no workers’ compensation insurance.  As a result of the firm’s efforts, the trial court found the subcontractor was not properly licensed and was barred from any recovery.  Additionally, the trial court awarded the firm’s client all of its attorneys’ fees and costs to defend the lawsuit.  The subcontractor appealed.

The Fourth District Court of Appeal agreed with the firm and affirmed the judgment in favor of the general contractor.  The court recognized that the subcontractor was not duly licensed at all times and its false representations to the CSLB to obtain reinstatement were insufficient to avoid the consequences of Business and Professions Code section 7031.

A copy of the published decision can be viewed here.

Am. Bldg. Innovation Lp v. Balfour Beatty Constr. (Sep. 3, 2024, Nos. G062471, G062965) ___Cal.App.5th___ [2024 Cal. App. LEXIS 543]

Counsel: Jason R. Thornton, Daniel P. Scholz, and Scott M. Bennet

The firm’s client was the low bidder for a public school construction project.  The client received a bid protest from the second low bidder on the grounds the client’s listed subcontractors were not qualified to perform the work as required by the specifications.  The firm responded to the bid protest using its technical knowledge of bidding laws to establish the protest was improper.  The firm demonstrated the protest was hypothetical and its client had multiple options for satisfying all qualification requirements of the project specifications prior to commencing performance.  The awarding body agreed with the firm, and the project was awarded to the firm’s client.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm represented a prime contractor and its surety defending a lawsuit by an electrical subcontractor in connection with its work on a water treatment plant.  The electrical subcontractor filed suit before its work on the project was complete, and sought considerable damages for subcontract balance, change order work, delay damages, and enforcement of a stop payment notice.  The prime contractor disputed the claim due to defects in the subcontractors work, and believed the subcontractor, not the prime contractor, was responsible for delays on the project.  The firm undertook the defense of the prime contractor, filed a cross-complaint, and through the course of discovery, assisted the prime contractor to assert its affirmative claims.  The firm demonstrated the subcontractor’s claims were significantly less than the amounts being sought.  After a series of negotiations with the electrical subcontractor, the firm obtained resolution at a significant discount to the prime contractor’s total exposure, and the lawsuit was dismissed in its entirety.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm defended a prime contractor and its surety from a lawsuit by an electrical subcontractor in connection with the renovation and conversion of a City library.  After repeated delays with the subcontractor’s performance and an emotionally charged on site altercation, the prime contractor made the decision to supplement the subcontractor’s performance and to back charge the subcontractor for the cost of completion.  In response, the subcontractor filed suit, asserting extensive damages for subcontract balance, approved change orders, prompt payment penalties, interest, and attorneys’ fees.

Rather than respond to the lawsuit, the firm recognized the case as being ripe for mediation and determined its efforts would be best devoted to negotiation.  The firm articulated its client’s claims, and demonstrated to the subcontractor the circumstances had given both parties’ claims that could lead to a messy and complicated litigation.  The parties agreed to appoint a mediator, and through a series of written and in person negotiations, achieved a mutually agreeable resolution that accounted for both parties’ principal claims.

Counsel: Jason R. Thornton, Scott M. Bennett, and Jacob W. Goldschlag

The firm represented a prime contractor in connection with a claim asserted by its underground utilities subcontractor on a project for the construction of public school classrooms.  The prime contractor faced a substantial delay and inefficiency claim from its subcontractor arising from nationwide supply chain issues, that caused significant project delays and mandated extensive resequencing of the subcontractor’s work.  The parties commenced arbitration and the firm assisted the prime contractor to prepare its own claims based on the subcontractor’s self-inflicted delays and inefficiencies.  In addition, the firm identified technical defenses based on the subcontractor’s failure to comply with the subcontract.  With the support of the firm, the prime contractor maximized its recovery by passing through the subcontractor delay claims to the project owner, and after receiving partial reimbursement, was able to negotiate a discounted settlement that extinguished the subcontractors’ claims, and secured a complete dismissal of the arbitration.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm represented a prime contractor in an action against the U.S. Army Corps of Engineers (USACE) before the Armed Services Board of Contract Appeals (ASBCA) that resulted in judgment.  The client performed work on two projects for the Department of Veterans Affairs administered by the USACE – a $3.8 million contract to rehabilitate a transition center and a $7.4 million contract for the expansion of a research facility.  The USACE made numerous design changes which increased the scope of the client’s work on the rehabilitation project and significantly delayed construction, but refused to pay for the additional work and time-related costs.  On the research facility, the USACE issued multiple unilateral time extensions due to government-caused delay, but again refused to compensate the client for its time-related costs.

The firm helped the client prepare certified claims on both projects, and later, filed appeals with the ASBCA.  After the USACE unsuccessfully moved to dismiss the appeals, the firm attempted resolution early in the litigation.  Early attempts at settlement were ignored, so the firm pressured the USACE with written discovery and sought depositions of USACE personnel.  Prompted by this discovery and the prospect of being forced to a hearing, the USACE agreed to pay $550,000 before the close of discovery.  A consent judgment was entered and the client was paid within 60 days.​

Counsel: Jason R. Thornton and Justin M. Stoger

The firm represented the prime contractor constructing a water reclamation and treatment project for a large water district.  The project involved construction of novel UV treatment technology resulting in a series of substantial design changes and project delays throughout.  The prime contractor engaged the firm early in the project, allowing the firm to provide support throughout the project – which spanned over several years – monitoring project delays, drafting key correspondence, advising on the collection of added costs, and collaborating with experts to track and record key project impacts.

The Firm’s Early Involvement Was Instrumental To Positive Resolution.

At the conclusion of the project, the prime contractor was owed several million dollars by the public agency comprised primarily of extended general conditions and change order work.  However, the district asserted a substantial liquidated damages claim which it contended nullified the prime contractor’s claims, and sought payment of damages in excess of a million dollars.  Fortunately, due to the firm’s early involvement, the prime contractor was properly positioned to defend the owner’s claim and prosecute its own claims for damages.  The firm represented the prime contractor in the contractual and statutory claims procedures, participated in various face-to-face negotiations with the district, and secured a multi-million dollar settlement.  The prime contractor paid no liquidated damages and recovered a the majority of its damages. The dispute was settled without the need for litigation.

Counsel: Jason R. Thornton and Scott M. Bennett

RAIL PROJECT

The firm represented the general contractor in defense of an underground utility subcontractor’s multi-million dollar dispute concerning project delays and contractor’s license issues related to work on a rail project in California. Less than a month before trial, the case settled on favorable terms.

Counsel: P. Randolph Finch Jr., Jason R. Thornton, and David W. Smiley 

The firm represented a prime contractor in arbitration relating to two projects; the construction of an art gallery and renovations of a school gymnasium.  The prime contractor was defending claims from its demolition subcontractor on both projects, which was seeking considerable damages for additional work, as well as claims for interest, prompt payment penalties, and attorneys’ fees.  The subcontractor contended the added work at issue was excluded from its subcontract, and did not appear on the demolition plans for either project.  The subcontractor refused the prime contractor’s attempts to settle the claims early on in the arbitration, leaving the firm’s client with no option but to defend the claims. After multiple days of arbitration, the firm had dismantled the subcontractor’s claims by presenting a series of factual and contractual defenses.  Before the final decision was rendered, the prime contractor made a final offer to settle, and obtained a settlement for a fraction of the principal claims at issue.  Through its vigorous advocacy at arbitration, the firm was able to defend all claims for penalties, interest, attorneys’ fees, and costs.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm defended a prime contractor from a lawsuit by a plumbing subcontractor in connection with the construction of an aquatics center.  Before the project was complete, the plumbing subcontractor filed suit to enforce a stop notice which included retention and a mix of approved and unapproved change orders.  The subcontractor also asserted unwarranted claims for prompt payment penalties, interest, and attorneys’ fees.  The firm evaluated the claims and identified a series of contractual and statutory defenses.  The firm recommended our client make an early strategic Code of Civil Procedure section 998 settlement offer.  By doing so, the prime contractor was able to achieve a settlement at a discount from the principal balance, and avoided incurring any liability for prompt payment penalties, interest and attorneys’ fees.  The lawsuit was resolved without the prime contractor ever making an appearance in the case.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm obtained summary judgment on behalf of a sheet metal supplier in connection with a public works project for the construction of a new dock.  The supplier’s customer, a subcontractor on the project, refused to pay the supplier after a dispute arose with the general contractor.  The supplier was then drawn into a multi-party litigation, significantly increasing the suppliers’ costs.  The subcontractor contended the supplier failed to provide certain parts and warranties required by the parties’ supply agreements.  After engaging in discovery and obtaining key testimony from principal witnesses, the firm successfully brought a motion for summary judgment on the grounds the supplier had fully discharged its obligations under the supply agreements.  The supplier was awarded the full amount of its principal claim and interest.  In addition, the supplier received a substantial award of attorneys’ fees and costs, which were significantly more than the supplier’s principal claims but which had been precipitated by the subcontractor’s litigation tactics.

The subcontractor appealed.  The firm diffused each of the contractual arguments asserted by the subcontractor through the application of the fundamentals of contract law, and the critical evidentiary record it had prepared in support of the summary judgment motion.  The appeal was defeated and the trial court award was affirmed.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm defended a prime contractor and its surety from a lawsuit brought by one of its key multi-scope subcontractors, on a project for the construction of a new classroom building.  During the project, the prime contractor withheld certain payments from the subcontractor due to the subcontractor’s failure to satisfy conditions precedent to payment and other performance related issues.  At the conclusion of the project, the subcontractor filed suit for the subcontract balance.  In addition, the subcontractor asserted a lost profit and goodwill damages claim of approximately $9,000,000.00, and sought punitive damages.

As a result of its investigation, the firm discovered the subcontractor had made misrepresentations to the Contractors State License Board (“CSLB”) during the project about the number of workers on its payroll and its workers’ compensation insurance.  As a result, the subcontractor’s license was invalid and all of its claims were barred as a matter of law.  At trial, after several years of high stakes litigation, the court found the subcontractor had indeed misrepresented facts to the CSLB, invalidating its license, and providing the prime contractor with a complete defense to the subcontractor’s claims.  The subcontractor’s claims were dismissed in their entirety, and the prime contractor received a seven figure judgment, representing 100 percent of the attorneys’ fees incurred in the litigation and over 97 percent of the costs.

Counsel: Jason R. Thornton, Daniel P. Scholz, and Scott M. Bennett

The firm represented a real estate investor who had purchased property on behalf of a joint venture, putting his partner on title.  When the partner failed to uphold her side of the agreement and, more importantly, began withholding property-generated income, the firm initiated a partition lawsuit to recover the investor’s investment and damages.  The firm subsequently negotiated a favorable settlement to recover attorneys’ fees and collection costs, and transition the investor into the status of secured creditor.

Trouble persists, but perseverance pays off.

When the joint venture partner failed to make payment, foreclosure proceedings were immediately initiated.  The firm again negotiated a favorable settlement which recovered substantial default interest, attorneys’ fees, and collection costs.  It also included a restated secured promissory note with a limited term and a well-above-market interest rate.  The former partner successfully paid off the loan and returned the investor significant profit on his initial investment​.

Counsel:  Jason R. Thornton and Thomas E. Diamond

The firm was retained by a general contractor regarding the default termination of a subcontractor on a public school project.  The subcontractor had walked off the job and sued the general for approximately $570,000.00.  The firm commenced arbitration against the subcontractor seeking almost $375,000.00 in costs to complete above the subcontract balance at termination.

During discovery it was learned the subcontractor had performed work for roughly a month without the proper license classification.  The firm obtained a binding arbitration award against the subcontractor for $1,374,290.69, which included disgorgement of all amounts paid to the subcontractor, the increased costs to complete, interest, and attorneys’ fees and costs.

The award was confirmed as a judgment against the subcontractor for the full amount awarded.

Counsel: P. Randolph Finch Jr., Jason R. Thornton, and Scott M. Bennett

The firm represented a prime contractor in connection with a dispute involving the renovation of certain Naval buildings and facilities.  Following a torrential downpour, several parts of the buildings’ interior floors were damaged resulting in the prime contractors’ costs to perform flooring installation being almost double the cost originally contemplated.

A RECALCITRANT SUBCONTRACTOR WAS no match for Finch, Thornton & Baird, LLP.

The firm prepared a claim against the roofing subcontractor for failing to protect the interior of the building.  The roofing subcontractor disputed the claim in its entirety — instead blaming the prime contractor for the leaks and alleging no additional costs were incurred because the flooring installation was already required under the base contract.  The subcontractor handed the matter over to its insurer to defend.

Aggressive representation with attention to detail triumphs.

Initially, the insurer offered just 5 percent of the prime contractors’ costs to settle the claim.  The firm refused to back down.  The firm substantiated the repair costs and identified law establishing the roofing subcontractor was irrefutably at fault.  Following an extensive negotiation, the firm secured payment in full of the additional costs sought resulting in a 100 percent recovery on its client’s principal claim.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm represented a national subcontractor in multi-party litigation against the prime contractor and its sureties on a large project for the Metropolitan Water District of Southern California (“MWD”).  The prime contractor was pursuing the subcontractor’s disruption and inefficiency claims on a pass-through basis.  The firm’s client, however, was intent on recovering from the prime – regardless of its recovery from MWD.

Finch, Thornton & Baird, LLP engaged after failed first mediation attempt.

Prior to the firm’s involvement in the case, the parties had engaged in a failed mediation effort.  After the firm became involved, the parties participated in a voluntary document exchange, which included substantial Electronic Stored Information (ESI).  The firm worked hard to control litigation cost and efficiently gather and produce ESI.

Firm prevails after a second, more vigorous mediation.

Following the parties’ document exchange, they renewed their efforts at mediation.  The firm vigorously advocated the client’s case at mediation.  As a result, several weeks following the mediation, the firm’s client was able to secure a settlement with the prime contractor in excess of $1.1 million, and to avoid extensive litigation costs.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm’s client was the prime contractor responsible for construction of a new stormwater system on a local public entity’s high school campus.  The project was plagued with design errors from the outset, resulting in delay to the start of construction, standby, inefficiency, and interruption of the construction.  The contractor’s damages included labor escalation, direct field costs for equipment and facilities, extended project management, and unabsorbed home office overhead.

THE FIRM’S EARLY INVOLVEMENT PAYS OFF.

The contractor got the firm involved early to assist with preparation and submission of a claim and to make sure its rights were preserved.  The entity initially rejected the claim, relying on technical defenses.  In response, the firm guided the contractor through the contract claim process — including an informal meet and confer — and was able to rebut each of the entity’s arguments.  Ultimately, following the informal meeting, the entity agreed to settle the claim by paying the majority of the contractor’s damages, including a substantial portion of the home office overhead.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm represented a high-net-worth entrepreneur and business owner who was sued on his general indemnity agreement by a surety for a construction company in which the client was a former investor.  After the firm’s client was bought out of his investment, the company faced multiple lawsuits and bond claims resulting in it filing for bankruptcy.  Ultimately, the surety suffered losses of approximately $1.8 million.  The surety, in turn, demanded indemnification from the firm’s client under a general indemnity agreement he signed when he was an investor.

The firm’s legal hurdles were well established.

General indemnity agreements are notoriously difficult to defeat.  In response to the surety’s claim, the firm took the lead in mediating lawsuits against the surety to mitigate losses which could have been substantially worse.  The firm successfully defeated the surety’s attempt to attach the client’s assets.  The firm pursued other indemnitors to ensure those responsible for the losses would satisfy the surety’s claim.  Finally, the firm identified equitable defenses and weaknesses in the surety’s claim and convinced the surety to settle with the firm’s client for a fraction of the claim.

When all was said and done, the firm’s client paid less than 15 percent of his total original exposure.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm’s client was the second-lower bidder on a public works contract that involved campus improvements for a local school district.  Valued at over $10,000,000.00, the client initially protested the unfavorable contract award themselves.  After lawyers for the low bidder defended the protest, the district gave the client a mere 24 hours to respond. The client immediately turned to Finch, Thornton & Baird, LLP.

Timely Response to client results in $10 million bid protest award.

The firm’s attorneys met the district’s short deadline and successfully refuted the defense to the protest.  By identifying both evidence and law — and demonstrating the low bidder had failed to comply with bidding instructions and, thus, had an unfair advantage — the district had no option but to accept the protest — and our client’s bid.  The contract valued at over $10 million for the project was awarded to the firm’s client.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm’s client was the lease-leaseback contractor for construction of an elementary school in San Diego County.  Several years after the project was completed, the school district sued the project’s architect claiming the design for the heating, ventilating, and air conditioning (“HVAC”) system at the school was defective and did not allow for proper temperature regulation.

After litigating the case for several years, the architect filed a cross-complaint against the firm’s client, the HVAC subcontractor, and the HVAC commissioning agent.  The firm evaluated the claims and proceeded with several rounds of demurrers (pleading challenges), which resulted in the architect’s cross-complaint against the firm’s client being thrown out without the firm’s client having to extensively litigate its defense.

Judgement was entered in favor of the firm’s client.  The architect appealed the judgment.  While the appeal was pending, however, the parties reached a settlement in which the architect withdrew its appeal and the firm’s client paid nothing.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm represented a prime trade contractor in a dispute with a school district primarily concerning delay for a project that finished almost a year behind schedule.  The school district blamed the prime trade contractor for the delay and assessed substantial liquidated damages.

Prompt action. Prompt resolution.

The firm was able to negotiate a resolution of the dispute — without the need for any litigation or arbitration — which resulted in the school district releasing its claim for liquidated damages and paying the contract balance.

Counsel: Jason R. Thornton and Scott M. Bennett

The firm represented a framing subcontractor pursuing its outstanding subcontract balance which had been paid to the general contractor by the project owner, but withheld from the subcontractor.  The firm recorded a mechanic’s lien on behalf of the subcontractor and successfully obtained a summary judgment, arguing there was no dispute that all elements of a mechanic’s lien cause of action were satisfied.

The owner appealed arguing the subcontractor had no lien rights due to a recent corporate reorganization.  After extensive briefing and oral argument, the Court of Appeal upheld the judgment in favor of the subcontractor and the firm’s client was paid in full, including interest. ​

Counsel: P. Randolph Finch Jr., Jason R. Thornton, Andrea L. Petray, and Thomas E. Diamond

The firm’s client was the low bidder for a state highway project in California.  The second bidder challenged the bid for listing different subcontractor participation percentages.  After the awarding state agency overruled the protest and awarded the contract to the firm’s client.

The second bidder filed a lawsuit seeking a writ of mandate.

The firm successfully persuaded the court to hear the matter on an expedited schedule so a decision could be obtained before construction work started.  After a writ of mandate trial by briefs, the judge upheld the award to the firm’s client.

Counsel: P. Randolph Finch Jr., Jason R. Thornton, and Scott M. Bennett

The firm represented a general contractor against the Federal Government related to a federal construction project for the Department of Veterans Affairs.  The government directed extra work for which it refused to pay and delayed and suspended the work of the general contractor.

The firm filed a claim with the Civilian Board of Contract Appeals.

The parties were scheduled to mediate in person in an attempt to resolve the claim, but were delayed due to COVID-19.  The firm was able to successfully engage the VA’s counsel in direct settlement discussions which resulted in a stipulated judgment against the government in favor of the general contractor on its claim.

Counsel: Jason R. Thornton

The firm represented a lease-leaseback contractor performing work for the Torrance Unified School District.  A third party filed a lawsuit against the contractor and the District claiming multiple lease-leaseback agreements were illegal and seeking repayment from the contractor of all sums it had been paid by the District.  The amount in controversy exceeded $109,000,000.00.

ON REMAND, THE CASE WENT TO TRIAL.

On remand, following the initial appeal in this matter, the case went to trial on a single cause of action alleging a conflict of interest.  We defended the case based on the plaintiff’s lack of diligence causing the action to become moot as the school construction projects at issue all completed prior to trial.  Following a bench trial, the trial court granted judgment in favor of the firm’s client.  The third party challenger appealed.

SECOND DISTRICT COURT OF APPEAL AFFIRMS JUDGMENT IN FAVOR OF CLIENT.

The Second District Court of Appeal again agreed with the firm’s client and affirmed the judgment in favor of Balfour Beatty and the District.  The court recognized the plaintiffs’ failure to timely prosecute the reverse validation action allowed the challenges to the agreements to become moot, requiring dismissal.

Validation and reverse validation actions serve an important function in quickly determining the legality of the award of certain public entity contracts.  Timely determination of validity is a key public policy.  This important decision impacting lease-leaseback contractors and public entities confirms prompt resolution of the claims is required.

A copy of the published decision can be viewed here.

(2020) 49 Cal.App.5th 814

Counsel: Jason R. Thornton and Daniel P. Scholz