Tutor-Saliba Corp. and several partners have agreed to pay the city and county of San Francisco $19 million to settle a lawsuit alleging that the firm overbilled the city and manipulated minority contracting laws as lead builder on the expansion of San Francisco International Airport.
The agreement caps a contentious three-year legal fight, during which the Sylmar-based public works giant personally sued San Francisco City Atty. Dennis J. Herrera. The case was later dismissed.
On Thursday, both sides, neither of which admitted liability in the settlement, said they were ready to move past the dispute.
“Considering the costs we expended to date, and costs to continue to try the case, I thought taking this figure now represented a very fair result for the city,” Herrera said.
The settlement comes as Tutor-Saliba, which has a long and sometimes controversial construction history in high-profile Los Angeles public works projects, is scheduled to begin a $253-million program to rework the southern runway complex at Los Angeles International Airport next month.
The San Francisco case, which was filed in U.S. District Court in November 2002, asked for $30 million in damages and attorney fees. It alleged that Tutor-Saliba, Massachusetts-based Perini Corp. and Pennsylvania-based Buckley & Co. intentionally inflated bills for work on seven airport projects -- increasing the original value of contracts by 57% from $626 million to $984 million.
The lawsuit alleged that Tutor-Saliba and its partners used “minority fronts who were paid to lend their names while non-minority subcontractors did the work” and initiated a “scheme to artificially inflate the amounts claimed for project work through fraudulent change orders, fraudulent applications for payment, and manipulated project schedules and other supporting data that falsely portrayed delays and job progress.”
From 1996 through 2001, Tutor-Saliba built the international terminal, a boarding area, several parking garages and a train connecting the airport with other facilities.
Ronald Tutor, president of Tutor-Saliba and chairman and chief executive of Perini, declined to discuss specifics of the 19-page settlement, saying simply that he was relieved that the legal fight was over.
“You know what costs of litigation are,” he said. “You can be dead right and still outspend the value of the case.”
The settlement requires Tutor-Saliba and its partners to pay the city and county of San Francisco $19 million in four installments through 2009. The agreement must be approved by the Board of Supervisors of the City and County of San Francisco and the Airport Commission. Herrera said he was confident the entities would sign off on the deal.
Tutor-Saliba’s work also has been questioned in Los Angeles. In summer 2004, the city’s airport agency threatened to remove the company from a $34-million Van Nuys FlyAway expansion, saying that it had failed to fix alleged construction defects. The expansion opened late last year.
In late 2005, airport officials reluctantly approved the contract to rework the southern runway complex at LAX. They cited problems with the quality of work and delays that were attributed to understaffing on projects that Tutor-Saliba is building for UCLA and the Los Angeles Unified School District. Tutor has blamed the issues on design changes by UCLA and the school district and poor performance by subcontractors.
In a case with claims similar to the San Francisco litigation, Tutor-Saliba and the Metropolitan Transportation Authority are awaiting a new trial date in Los Angeles County Superior Court after a state Court of Appeal overturned a $30-million verdict last year. The court found that the builder did not receive a fair trial in its long-running dispute with the MTA over subway construction costs.
Tutor contended that the MTA owed it $16 million for unanticipated expenses incurred while building Red Line subway stations along Wilshire Boulevard.
The MTA countersued, contending that Tutor’s firm submitted false claims in pursuit of extra payments.