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Federal jury awards $45 million to company suing DWP

Federal jury awards $45 million to company suing DWP
A federal jury has awarded $45 million to a company hired by the DWP to modernize a power plant. The jury also awarded $1 million to the DWP in a counterclaim. (Robert Gauthier / Los Angeles Times)

A federal jury decided this week to award $45 million to a company hired by the Los Angeles Department of Water and Power to modernize a Playa del Rey power plant, according to attorneys on both sides of the dispute.

The company, Kiewit Power Constructors Co., sued the department claiming it had incurred extra costs because of delays caused by the DWP and one of its contractors.

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But the jury also awarded $1 million to the DWP, which had filed a counterclaim arguing that Kiewit had fallen short of its obligations under its contract to revamp the Scattergood Generating Station, according to attorneys.

Kiewit spokesman Bob Kula said the company was “very pleased” with the jury decision, “which validates our claims regarding payment for additional work our company performed.”

“This work was to overcome significant delays in the delivery of crucial equipment provided by LADWP and deliver the Scattergood Project on time,” Kula said in a written statement.

DWP spokesman Joseph Ramallo said Tuesday, “We are disappointed with the decision reached in this case and will evaluate our legal options in the coming days.”

However, Ramallo added that the utility was “encouraged by the fact that the jury found Kiewit unfairly interfered with DWP’s rights to receive the benefits of the contract and awarded damages to DWP as well.”

The federal judge overseeing the case in U.S. District Court has yet to enter a written judgment, which is not expected for at least a month, Ramallo said.

Kiewit sued the DWP two years ago, charging that the utility had refused to pay the company for the costs of delays and additional work under its $440-million contract for construction and design work at the generating station in Playa del Rey. Some of the equipment needed for the project was damaged when a storm struck a cargo ship on its way from Korea.

The company claimed in its suit that the damage required Kiewit to do repairs and led to further delays as some equipment was refabricated in Korea. Later deliveries were also delayed, and Kiewit had to accelerate its work to meet a deadline set by the DWP, the company said in the lawsuit.

Kiewit estimated it had incurred roughly $49 million in damages. The DWP denied the allegations and lodged a countersuit against the company, asserting that it had failed to meet deadlines under its contract and was making “unfounded” excuses for its lateness.

The problems Kiewit had cited — such as the damaged equipment — either did not actually delay its work or “reasonably should not have resulted in any such delays,” the DWP argued in its suit.

In a legal brief, the utility claimed that Kiewit was already behind schedule before the equipment was damaged at sea and had suffered cost overruns of its own making, calling the power plant that Kiewit had delivered “a lemon.” The department said its damages may have exceeded $150 million, according to a court filing.

The DWP also sued another contractor involved in the project, General Electric, claiming that the equipment was destroyed or damaged at sea due to that company’s “breach of contract and negligence.” In its lawsuit, the DWP said that although it denied the claims from Kiewit, if it was found liable in the case, “General Electric is solely responsible for those damages.”

Ramallo said that the utility had successfully recovered $19 million from General Electric under a settlement agreement, which would help offset any payment to Kiewit.

“Any amount ultimately due from this case is within the project contingency amount and will not impact ratepayers,” Ramallo said in a written statement.

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