IRVINE

A small engineering company is suing the Irvine Co., alleging breach of contract, fraud and negligence because the developer failed to disclose that 96,000 tons of dirt were lying on a project site.

The conflict began in July 1999, when Newport Beach-based Clayton Engineering won a $4.7-million bid to widen the north side of the Walnut Avenue bridge for the Irvine Co. Clayton soon discovered a mammoth amount of dirt in the Peters Wash Canyon channel. The company removed 60,000 tons of the dirt in October and left the project in March without reimbursement.

Clayton executives say they paid $2.2 million to remove and work around the dirt, then were forced to close last month.

But an Irvine Co. official said the agreement with Clayton was clear.

“I do think that, in general, experienced bidders would examine and inspect the job site,” said Rich Elbaum, spokesman for the Irvine Co. “Our contract is signed by both parties with eyes wide open.”