A Los Angeles Superior Court judge has ruled that construction giant Tutor-Saliba Corp. intentionally withheld and destroyed documents in a landmark case with the Metropolitan Transportation Authority over alleged false claims for payment on the Metro Rail subway project.
Judge Joseph Kalin told jurors Tuesday that the only issue left for them to decide is the amount of damages the MTA should receive because of Tutor-Saliba’s conduct. He instructed the jury not to speculate about why the hard-fought case was abruptly truncated after nine weeks of trial.
Out of the presence of the jury, Kalin on Friday terminated Tutor-Saliba’s six-year case against the MTA after finding that the contractor and its lawyers failed to produce documents and evidence despite multiple court orders and monetary sanctions of more than $100,000.
“There has been intentional withholding of documents and evidence in this case and . . . there’s been intentional destruction of documents,” Kalin said. Tutor-Saliba’s lawyer and chief executive declined to comment on their next step, with the lawyer saying only that she disagreed with the judge’s order.
His ruling effectively means that the MTA has won one of the longest and most expensive legal fights in its history. The only remaining questions are how much it will collect in damages--and what will happen to Tutor-Saliba at the conclusion of the case.
In addition to the possibility of large damages, the company could be barred from participating in public works projects. That would devastate one of California’s best-known construction companies, which has immense projects across the state--and a controversial reputation locally.
Among the many signature projects in which it has been a prime contractor are the San Diego Convention Center, San Francisco International Airport, the Los Angeles Central Library and the Metro Rail subway in Los Angeles. Collectively, those and other projects represent billions of dollars in public works.
MTA Struggled to Secure Documents
The case that brought Tutor-Saliba and the MTA into legal conflict began in 1995, and was filed by the company. Over the years, the firm sought as much as $16 million in damages because of the transit agency’s alleged refusal to pay a number of claims, primarily involving work on three Wilshire Boulevard subway stations. Even before the judge terminated the contractor’s case, those claims had been pared back to less than $2.5 million.
Throughout the litigation, the two sides have struggled over the MTA’s efforts to secure documents from its contractor. Kalin cited Tutor-Saliba’s resistance to court orders for documents and other materials, and he accused the company of defiance.
“There has been a long pattern of discovery abuse in this case by the plaintiff,” Kalin said. Tutor-Saliba aggressively fought many of the MTA’s motions seeking access to its pre-bid documents that contained calculations of how much various aspects of the Wilshire/Normandie subway station would cost.
In Los Angeles, the company is perhaps best known for its extensive work on the MTA subway, a long-troubled project that has failed to achieve its initial promise and that has resulted in bitter feelings among some of the principals.
Tutor-Saliba and its chief executive, Ronald Tutor, also are important political players, giving to politicians throughout California. Tutor contributed $75,000 in the recently completed Los Angeles mayoral race to pay for a mailer that denounced former Assembly Speaker Antonio Villaraigosa and trumpeted the candidacy of James K. Hahn.
Hahn’s election as mayor last month meant that he took a place on the MTA board. That board has scheduled a special, closed-door session for today. According to MTA officials, the board is scheduled to discuss whether to accept an offer by Tutor-Saliba to settle the matter.
Kalin’s order effectively ended Tutor-Saliba’s case against the transit agency, but it did not conclude the other half of the litigation, in which MTA countersued under the state False Claims Act.
Kalin said from the bench that he would not permit attorneys for Tutor-Saliba and its venture partner, Perini Corp., to proceed with their case, nor may they answer the MTA’s countersuit. Perini is now controlled by Tutor-Saliba.
“This case against Tutor-Saliba-Perini is not just about money,” MTA chief executive Julian Burke said. “The MTA wants to send a strong message to these contractors and all the others that do business with the MTA or any other public agency in this county that you have to abide by the law or face stiff consequences.”
Tutor, who was in the courtroom Tuesday, declined to comment until the trial is over. Closing arguments are expected early next week. Tutor’s attorney, Nomi Castle, said she did not agree with the order and declined to elaborate.
The MTA’s outside lawyer, David B. Casselman, hailed the judge’s ruling.
“He is doing the only thing he can do to enforce the integrity of his court,” Casselman said. “There has been evidence withheld, evidence destroyed, and misrepresentations to the court and counsel.”
Tutor-Saliba Got $945 Million
Tutor-Saliba, the biggest contractor on the Los Angeles subway project, received nearly $945 million for work on the $4.7-billion rail system. Ten of the system’s 16 stations were built by the company.
Problems arose at various points during the long construction process. Concrete walls in a stretch of tunnel downtown were found to be far thinner than required. Another tunnel was misaligned. Two of the three workers killed in accidents on the project were Tutor-Saliba employees.
Still, Tutor-Saliba has continued to work on some of the area’s most vaunted construction projects. The company is now building the Alameda Corridor project to connect the ports of Los Angeles and Long Beach with railroad yards near downtown Los Angeles.
In addition, the company is working on a major expansion of San Francisco International Airport and extension of the Bay Area Rapid Transit system to serve that airport.
Casselman told jurors in the Los Angeles case that Tutor-Saliba materially misrepresented financial information by moving costs from one subway project to another. He charged that Tutor on occasion used false fronts that he controlled rather than legitimate minority contractors to do work.
“Tutor-Saliba provided the labor. Tutor-Saliba provided the equipment, and they provided it from their own company,” Casselman said.
Jurors heard more complete testimony on the question of fronts Tuesday when they saw an edited videotape deposition of Necola Yvonne Shaw, an expert on disadvantaged business enterprises with 17 years of experience with numerous federal agencies and transit districts.
After studying many documents, compliance manuals, pieces of correspondence and other sources, Shaw concluded that Tutor controlled two concrete companies--AccuCrete and Golden Bear--that the contractor claimed were legitimate disadvantaged business enterprises. Instead, both companies were fronts, Shaw said.
Attorneys for Tutor-Saliba were not allowed to cross-examine Shaw, who was unable to travel to Los Angeles.
Attorneys for Tutor-Saliba rejected the MTA’s accusations. Tutor lawyer Castle told jurors at the beginning of the trial that the MTA’s countersuit was, in effect, a form of retaliation against the company.
“They are trying to put them out of business because he filed a lawsuit to get paid for the work that he did,” she said.
After giving an introductory course on bidding and construction to the jury, Castle outlined Tutor-Saliba’s arguments that the MTA breached its contract by failing to pay for some of the work on subway stations.
“The MTA has accepted and has been using all of these projects. The trains have been running for years,” Castle said, “all of this without the MTA having paid the remaining cost that the contract provides for.”
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
One of the nation’s biggest construction companies, Tutor-Saliba Corp. has built more than $5 billion worth of public works projects across California. The Sylmar-based construction giant has been a prime builder on the following projects:
* Metro Rail subway
* Alameda Corridor
* Tom Bradley International Terminal/LAX
* Los Angeles Central Library
* Roybal Federal Building, Los Angeles
* Reconstruction of Los Angeles Memorial Coliseum
* San Diego Convention Center
* San Francisco International Airport
* Bay Area Rapid Transit extension to airport
Source: Tutor-Saliba Corp.