County Agrees to Settle Over Airport Project

The three-year legal battle between Orange County and the company hired to build the John Wayne Airport terminal ended this week when county officials agreed to pay $9.6 million to settle more than a dozen lawsuits over that massive project.

Supervisor Thomas F. Riley, for whom the terminal was named, claimed victory for the county, saying the settlement amounts to a little more than what the county still owed the builder, Taylor Woodrow California Construction Ltd., for its completed work anyway.

“We got an excellent deal out of it,” Riley said Tuesday. The settlement, along with what has already been paid to Taylor Woodrow, “didn’t cost us anything above what we planned for the project.”

A Taylor Woodrow spokesman refused to characterize the settlement as a victory or defeat. Under terms of the agreement, neither side admits liability.

With the agreement, the county will have paid Taylor Woodrow $66.6 million. That’s $1.3 million above what the county already had authorized. But the county had held back some funds as insurance against payment disputes and is now using that to pay for most of the settlement.

The total cost, however, is still almost $25 million more than the $42 million county officials estimated the new terminal would cost before any bids were opened.

Supervisor Harriett M. Wieder, who criticized Taylor Woodrow for “costing us so much time” in delays on the opening of the airport, added that “this settlement spares us the expense of an extended trial,” which was scheduled to began in Superior Court on July 19.

Judy Johnson, a spokeswoman with Taylor Woodrow, said Tuesday that in looking at the settlement, “there are a lot of numbers and there are a lot issues with a lot of parties, and in releasing specifics about the settlement, you can choose whatever set of numbers you want to.

“Taylor Woodrow is very proud of the job that it did on the Riley terminal,” she said.

The legal battle dates back to May, 1990, when the county fired Taylor Woodrow, because work on an airport garage and a new roadway was eight months behind schedule. The county hired Irvine-based McCarthy Brothers to finish the project.

Taylor Woodrow countered by filing a $7.2-million breach-of-contract suit.

In 1992, Taylor Woodrow filed a second lawsuit claiming the county owed $28 million in unpaid work on the terminal. The suit also sought a $1.5-million good-performance bonus for its work in securing a September, 1990, opening for the terminal, even though it missed the original deadline by five months.

About 10 other lawsuits--totaling about $12 million--were also filed by subcontractors hired by Taylor Woodrow against both it and the county.

The county’s disputes with Taylor Woodrow stemmed in large part from about 850 design changes that were ordered for the terminal, many of which were an attempt to save money. The changes involved everything from revisions in carpet color to plastic lamination on corridor walls and the marble used at the base of the John Wayne statue that decorates the terminal lobby.

In its lawsuit seeking recovery of terminal construction costs, Taylor Woodrow said the flurry of change orders contributed to the delay of the terminal project.

Under the settlement, HPV, a private firm hired by the county to oversee the airport’s $310-million expansion, also agreed to pay Taylor Woodrow more than $2.7 million, county officials said.

In addition, subcontractors will receive $3.8 million.

In all, “I think (the settlement) was very fair,” Wieder said. “They cost us a lot of time on opening the terminal, and time is money for anybody.”

Supervisor Roger R. Stanton blasted Taylor Woodrow for even thinking that it was owed so much more money.

“Early on, they were kind of turning up the volume on rhetoric and took some outrageous positions,” Stanton said. “Their tactic clearly didn’t work. I was always amazed the people in their organization even thought it was going to work.”

Stanton acknowledged that the settlement does raise the cost of the terminal far above the original bid accepted by the Board of Supervisors nearly six years ago, which in turn was supposed to be reduced during design changes intended to save money.

“The construction people I’ve talked to, who have nothing to do with the airport, tell me that we’re in the range of acceptable tolerance” on the terminal’s final cost figures, Stanton said. “I think it was a just settlement.”

County officials said they do not have the amount the county spent on attorney’s fees. A Newport Beach law firm was hired at rates of up to $270 an hour to assist County Counsel Terry C. Andrus.

Stanton also said he doesn’t know the legal costs involved, but said the county’s legal team, including private counsel, had “earned its fees.”