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Courts: Both sides have unnecessarily spent much money on lawyers and trial preparations, they contend. Mayor insists suit has merit.

February 09, 1992|MATHIS CHAZANOV | TIMES STAFF WRITER

BEVERLY HILLS — With a long, complex and expensive trial yet to begin, attorneys for the firms that built the final phase of the Beverly Hills Civic Center say the city has wasted vast amounts of time and money on unnecessary depositions, interrogatories and just plain nasty letters.

At least one subcontractor has gone out of business and others are suffering because Beverly Hills has refused to pay its bills, they said, adding that the city is hardly likely to win a clear-cut victory in court.

"The people there want to believe they got screwed," said Rubin M. Turner, who represents PFC Inc., a drywall firm that is one of three major subcontractors.

"These are not businessmen," Turner said, "these are politicians who are concerned with how they look. . . . These guys were building a monument but it ran loose and they got embarrassed."

But Mayor Vicki Reynolds said that the City Council is on top of every move made by its attorneys, and that city officials are determined to make somebody pay for multimillion-dollar cost overruns on the construction of a library, police station and outdoor courtyards.

"The more we've gotten into it, the more we're convinced that our suit has merit," Reynolds said.

She noted that she and her colleagues were not in office when work began on the $120-million-plus Civic Center, which was originally expected to cost less than half that much.

The final phase went awry soon after it began in 1987, when asbestos was discovered in the old library building and ground water welled up at the site of the police station. The complex also includes a fire station and a parking structure, which were completed earlier.

"Obviously, since this council has been left to pay for the cost of having it built, we are making every conscientious effort to come to a settlement or go to trial," Reynolds said. "We're not looking to rack up any legal fees beyond what we feel is necessary to bring this case to an end."

The legal proceedings have already lasted almost two years, as long as it was supposed to take to build the final phase of the Civic Center.

The city has paid $2.5 million to its special counsel so far, with about $400,000 more pending, records show.

Beverly Hills is seeking at least $8 million in damages, plus interest and legal fees, from its general contractor, the J. A. Jones Co. For its part, the North Carolina-based company is claiming more than $13 million from the city. Lawyers for the company say Jones has been paid $62 million, while actual costs were $75 million, not counting interest.

The case also involves three major subcontractors, a construction management company that was brought in halfway through the project, insurance companies and a few smaller firms, some of which are expected to settle out of court before the trial begins.

Several other companies have already been paid off by Jones and the city.

The claims will be heard without a jury by Superior Court Judge Kurt J. Lewin, whose clerk, Lee Rivas, jokes that festival seating will be needed for the lawyers to fit into Lewin's cramped courtroom at the Los Angeles County Courthouse.

Jack W. Fleming, the city's lead attorney, declined to comment on his plans, but court records show that he plans to make his case to Lewin in excruciating detail.

"The litigation should mirror its subject matter, and a construction project is an unfolding drama of sequenced and interrelated work activities," he said in one motion. "This case is characterized to an unusual degree by complexity and technical difficulty."

The city is claiming that Jones, the construction management firm JLH Inc., and John N. Hartsock, JLH's man on the scene, fraudulently persuaded the city to switch from its original fixed-price contract to a different procedure under which Jones and its subcontractors would be paid for their time and materials plus profit and overhead.

"It is the city's contention that Jones significantly underestimated the complexity of this project at the time of the bid," Fleming stated.

He also contended that Jones' West Coast office was drastically understaffed, that it could not schedule its workers properly and that it failed to understand the complexity of the project.

"In essence, Jones requests that the city reimburse Jones for a cost overrun of more than $30 million, when compared to the original contract price, on a project that was completed about a year and a half behind schedule," he said.

The Beverly Hills Police Department is pursuing its own investigation into the possibility of criminal fraud, Lt. Frank Salcido said. He said that five officers have been devoting much of their time to the case in recent months, but that no charges have been filed.

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