Oxnard Told to Pay $1.95 Million to Construction Firm : Courts: A judge upheld an earlier ruling that the city violated a contract with the company hired to build a storm drain.

A Superior Court judge has upheld an earlier ruling that requires the city of Oxnard to pay a local construction firm $1.95 million for violating a contract with the company.

A lawyer representing the city had asked Los Angeles County Superior Court Judge Ronald M. Sohigian to dismiss an arbitration ruling that said Oxnard breached a contract with B & Sons Construction Inc. of Oxnard.

But Sohigian ruled on Friday that the decision made in arbitration in May by retired Superior Court Judge Thomas T. Johnson was “supported by substantial evidence and was not based on an error of law.”

Oxnard City Atty. Gary Gillig said the City Council will consider the judge’s ruling today and decide whether to appeal.

Alan Holmberg, an attorney representing the city of Oxnard in the contract dispute, said he asked the judge to dismiss the arbitration ruling because he believes the city should not have to pay nearly $1.2 million in anticipated profits lost by B & Sons due to damage to the company’s reputation.

B & Sons lawyers had argued successfully that the canceled contract damaged the company’s ability to become bonded by insurance companies against failure to complete government jobs. Government contracts once made up 65% of the company’s business.

Lanny McKay, contract administrator for the company, on Monday criticized Oxnard officials for trying to renege on the arbitration decision to compensate the company for canceling the contract. He accused the city of spending taxpayers’ money to delay paying what it owes the company.

Holmberg disagreed, saying the city has a right to oppose the arbitration decision if it believes the ruling was unfair. The court hearing and the arbitration were held in Los Angeles because attorneys representing both sides of the case work in Los Angeles.

The dispute began in 1988 when the city offered B & Sons $4.8 million to build almost three miles of storm drain for water runoff in the 1,600-acre Northeast Industrial Assessment District in northeast Oxnard. Before the project could begin, the company discovered that the ground water and soil were contaminated by petroleum.

The company began working at the site while the city investigated how much it would cost to clean up the contamination. About six months later, the city determined that it would have to spend up to $12 million to remove the contaminants and build a storm drain there.

In December, 1988, when B & Sons refused to work on the contaminated section without high-cost safety provisions, the city fired the company.

Later, the city hired another company to complete the project and build the drain in another section of the district.

Johnson ruled during arbitration hearings that the city was liable for damages because it knew that the area where the drain was to be built was contaminated.

City officials have said that if the money is paid, the cost will be borne by property owners in the district, where business and industrial parks are to be built. The city administers the assessment district.