Free Amended Complaint - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Case No. 03-cv-2669-MSK-PAC LEPRINO FOODS COMPANY, Plaintiff, v. BIG-D CONSTRUCTION CORP. - CALIFORNIA, a Utah corporation; BIG-D CONSTRUCTION CORP., a Utah corporation; BIG-D CORPORATION, a Utah corporation; BIG-D CAPITAL CORP., a Wyoming corporation; and Does 1-100, inclusive, Defendants/Third-Party Plaintiffs, v. MARELICH MECHANICAL CO., INC. dba UNIVERSITY MARELICH MECHANICAL, a California corporation, Third-Party Defendant and Counterclaimant.

SUPPLEMENTAL AND AMENDED COMPLAINT AND JURY DEMAND

Plaintiff Leprino Foods Company ("Leprino"), by its attorneys, for its supplemental and amended complaint against the above named Defendants, states and alleges as follows: PARTIES, JURISDICTION AND VENUE 1. Plaintiff Leprino is a corporation duly organized and existing under the

laws of the State of Colorado, with its principal place of business in Denver, Colorado.

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2.

Leprino is informed and believes, and on that basis alleges, Defendant

Big-D Construction Corp.-California (" Big-D California" is a corporation organized and ) existing under the laws of the State of Utah, with its principal place of business in Salt Lake City, Utah, doing business as a foreign corporation in California. Leprino is

informed and believes, and on that basis alleges, Defendant Big-D Construction Corp. (" Big-D Construction" is a corporation organized and existing under the laws of the ) State of Utah, with its principal place of business in Salt Lake City, Utah, doing business throughout the United States, including in Colorado and California. Leprino is informed and believes, and on that basis alleges, Defendant Big-D Corporation (" Big-D Corporation" is a corporation organized and existing under the laws of the State of ) Utah, with its principal place of business in Salt Lake City, Utah, doing business throughout the United States, including in Colorado and California. Leprino is informed and believes, and on that basis alleges, Defendant Big-D Capital Corp. (" Big-D Capital" ) is a corporation organized and existing under the laws of the State of Wyoming, with its principal place of business in Salt Lake City, Utah, doing business throughout the United States, including in Colorado and California. Leprino is informed and believes, and on that basis alleges, that Big-D Construction, Big-D Corporation or Big-D Capital is the parent corporation of wholly owned subsidiary Big-D California; that Big-D Construction, Big-D Corporation or Big-D Capital undercapitalized Big-D California and freely commingled funds; that Big-D Construction, Big-D Corporation or Big-D Capital exerts total control over the day to day operations of Big-D California to such a degree that the corporations often interchangeably refer to one another and hold each other out

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to the public by the name of the parent and subsidiary without regard to form; and effectively ignore the corporate formality of being separate entities but instead act as one. Leprino shall hereinafter refer to Big-D Construction, Big-D Corporation, Big-D Capital and Big-D California collectively as " Big-D" or " Defendant." 3. This United States Federal District Court has jurisdiction pursuant to 28

U.S.C. § 1332 because Leprino is a citizen of the State of Colorado and Defendant is a citizen of the State of Utah and, upon information and belief, also a citizen of Wyoming. The amount in controversy in this action exceeds $75,000.00, exclusive of interest and costs. 4. Venue is proper in this district pursuant to 28 U.S.C. § 1391 because

Leprino's principal place of business is in Denver, Colorado, and the contract at issue herein included a valid choice of forum and choice of law clause providing in pertinent part the Contract shall be governed by and construed in accordance with the laws of the State of Colorado and the parties expressly consented to the exclusive jurisdiction and venue in the Federal courts for the District of Colorado, or where appropriate, the Colorado state courts. Defendant negotiated the contract by telephone and in person in Utah, Colorado and California. GENERAL ALLEGATIONS 5. Leprino is in the business of manufacturing, processing, storing and

selling cheese and related products. 6. On September 11 and 22, respectively, Defendant and Leprino executed a

written contract dated September 1, 2000 titled " Contract Agreement No. 3357"

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(hereinafter referred to as the " Agreement" The Agreement is between Leprino as ). " Owner" and Big-D/Defendant as " Contractor." The Agreement provides Defendant was to, among other things, construct an approximately 475,000 gross square foot dairy and related products manufacturing, processing and storage facility to be known as the Lemoore-West plant, located in Lemoore, California (the Lemoore-West plant shall hereinafter be referred to as the " Project" ). 7. Prior to entering into the Agreement, Leprino provided a bid package to

Defendant which contained, among other things, a construction schedule, project drawings and specifications and conditions of the contract (including, but not limited, to General, Special and other Conditions), some of which are deemed part of the Agreement pursuant to paragraphs 1.1 and 17. 8. The Agreement provides in Article 3 entitled Project Schedule that " TIME

IS OF THE ESSENCE" with respect to delivery, substantial completion and final completion dates. The Agreement requires Defendant to follow the project schedule, and this includes the concept of " Milestone Dates" by which certain portions of work for the Project were to be completed. The Agreement states " [n]otwithstanding anything to the contrary contained in the Contract, the work shall be Substantially Completed by not later than February 1, 2002 and Final Completion of the Work shall be achieved by not later than June 1, 2002." 9. General Condition paragraph 45.1 provides in pertinent part as follows:

Should the contractor contend that it is entitled to an extension of time for completion of any portion of the work, the contractor shall:

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a.

b.

Within forty-eight (48) hours of the occurrence of a delay, notify the owner setting forth the cause of the delay; a description of the work affected thereby; and all pertinent details. Within one (1) week after the cause for the delay has ceased to exist, submit written application to the owner for the specific extension of time requested. General Condition paragraph 45.4 provides:

10.

It is a condition precedent to the consideration of prosecution of any claim for an extension of time that the foregoing provisions be strictly adhered to in each instance. If the contractor fails to comply, it shall be deemed to have waived the right to claim and extension of time. 11. General Condition paragraph 45.5 provides:

The only remedy available to the contractor for a claimed delay shall be an extension of time. The contractor agrees that, whether or not a delay shall be the basis for an extension of time, it shall have no claim against the owner for: a. An increase in the contract sum; b. A payment or allowance of any kind for damage (including without limitation lost profits or consequential damages), loss or expense resulting from delays. c. Any damage, loss or expense resulting from interruptions to, or suspensions of, its work to enable other contractors to perform their work. 12. General Condition paragraph 43.3 provides:

If the contractor shall contend during the performance of the work, that the contractor is entitled to payment for an increase in the cost of the work, damage or loss because of any action or omission of the owner, or others engaged by the owner, the contractor shall not delay its work on account thereof and shall, within seven (7) days after the first observance of the occurrence, notify the owner, in writing, of the amount of its claim and all details in connection with the contention. 13. General Condition paragraph 43.5 provides:

It is a condition precedent to the consideration of prosecution of claims by the contractor that the foregoing provisions be strictly observed in each

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instance, and if the contractor fails to comply, the contractor shall be deemed to have waived the claim . . . . 14. Under the express terms of the Agreement, Big-D is required to indemnify

and hold harmless Leprino from any and all forms of liabilities, costs, damages, and expenses arising out of Big-D' performance under the Agreement, including losses or s claims related to mechanics liens. FIRST CLAIM FOR RELIEF (Breach of Contract) 15. Leprino incorporates the allegations contained in paragraphs 1 through 14

above as if fully set forth herein. 16. On or about September 11, 2000, Leprino and Defendant entered into a

written agreement for the construction of the Project. 17. Pursuant to the terms of the Agreement, Defendant promised, among

other things, to: A. Execute the entire work described in the contract documents for the

" Cost of the Work" as defined in Article 8, plus a fee, as defined in Article 8. Defendant was not entitled to payment or reimbursement for costs enumerated in Article 9. Defendant was permitted to subcontract portions of its work to others pursuant to Article 11, which generally requires that all subcontracted work would be for a certain sum set forth in a written change order. The Agreement provides at paragraph 11.5, " The Contractor [Defendant herein] shall award each Subcontract and Material Supplier agreement only after receipt of Owner' prior written acceptance . . . which constitutes s the Subcontract amount." Owner' acceptance will be by fully executed Change Order s

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to this Agreement." Article 7 provides the cost of the work and the schedule can be adjusted only by fully executed written change order. No work by a subcontractor was permitted, authorized or approved as a " cost of the work" unless such written change order was approved by Leprino before Defendant executed the change order with the subcontractor or supplier. B. Properly undertake the procedure for progress payments as Such payment procedures include Owner retention of

provided in the Agreement.

otherwise payable construction funds for reasons, including, but not limited to: (1) defective work that was not remedied, (2) failure of Defendant to make proper payments to subcontractors or suppliers, (3) for claims made against the Owner or the project by third parties, including subcontractors and suppliers, (4) for damages because the Project is not timely completed, and (5) for damages caused by Defendant' breach of s the contract. C. Coordinate the Work among Owner and subcontractors in a

manner that would facilitate the efficient completion of the entire Project. Supervise the Work of the subcontractors and materialmen to facilitate the efficient completion of the entire project. D. Complete the construction of the Project and assume responsibility

for the acts and omissions of its subcontractors, their agents and employees. E. Make all claims for extra compensation in writing as provided in

Article 43 of the General Conditions to the contract.

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F.

Make all claims for extensions of time in writing as provided in

Article 45 of the General Conditions to the contract. G. Eliminate non-meritorious claims by its subcontractors. Articles 1.3

and 11.10 require Big-D to use its best efforts to accomplish the work pursuant to the contract documents. Also, Article 11.1 prohibits Big-D from subcontracting for goods and services that would increase the " cost of work," unless approved by Leprino. Big-D has the duty to defeat claims by subcontractors for additional compensation where BigD failed to get prior approval, as well as any other non-meritorious claims. H. Exclusively litigate any and all disputes with Leprino in the State of

Colorado, pursuant to Article 15.8 of the Agreement. 18. Defendant breached the terms of the Agreement, including, but not limited

to, the following: A. Defendant failed to execute the entire work described in the

contract documents for the " Cost of the Work" as defined in Article 8, plus a fee, as defined in Article 8 and failed to manage the work such to prevent Defendant and its subcontractors from claiming the right to extra payment for work, despite the lack of a change order requests or an executed change order. B. Defendant demanded payment for money not otherwise due under

the Agreement; specifically, Defendant has sought payment for (1) unremedied defective work, (2) for funds withheld by Leprino due to claims of non-payment of approved invoices by certain of Defendant' subcontractors and suppliers, (3) for funds s withheld by Leprino to off-set claims made by certain subcontractors for funds well in

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excess of any approved or submitted change order request and to whom such funds are not due, such claims being the result of Defendant' breach of contract, (4) for funds s withheld due to actual and consequential damages caused by Defendant' failure to s timely complete the project, and (5) for funds withheld as a result of damages caused by Defendant' other breaches of the contract. At this time, more funds have been made s available to Defendant than are due under the contract, and Leprino seeks damages in excess of the retention withheld as above. C. Defendant failed to properly coordinate the Work with that of all

other contractors and the Owner, and in a manner that would facilitate the efficient completion of the entire Project. Defendant failed to properly supervise and manage the project to avoid unsubstantiated and baseless claims by its subcontractors. Defendant also failed to enter into subcontracts that were consistent with the Agreement. D. Defendant failed to assume responsibility for the acts and

omissions of its subcontractors, their agents and employees. E. Defendant has also materially breached the Agreement by, among

other things, not complying with the specifications, terms and conditions of the Agreement, in part, by not meeting the schedule set forth in the Agreement, by allowing substantial cost-overruns, including those related to subcontractors hired by Big-D, and by not indemnifying Leprino for the damages and losses it has sustained including, but not limited to, losses and damages related to third-party claims against the subject real property upon which the Project was constructed and delay caused by its subcontractors. Defendant also failed to timely notify Leprino of threatened claims, and

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failed to eliminate change order language that was inconsistent with the contract documents. F. Defendant is seeking, without satisfying the specific conditions

precedent in the contract, payment in direct contravention to Article 45 of the General Conditions. Defendant is further seeking to prosecute changes in the cost of the Work not reflected in written change orders as provided in Article 43 of the General Conditions. G. Defendant further breached the Agreement during the course of

this litigation by, among other things, its failure to vigorously defend the claims brought by Marelich Mechanical Co., Inc. (" UMM" and through any coordinated conduct ), between Defendant and UMM to increase Defendant' fees based on UMM' rejected s s claims. Defendant also breached the Agreement by joining UMM to prosecute claims Big-D has already determined were without merit. H. Defendant initiated a civil action in California and continues to

pursue motions and an appeal related to that case, in violation of Article 15.8 of the Agreement, among other conduct. 19. Leprino has performed all conditions, covenants and promises required on

its part to be performed in accordance with the terms and conditions of the Agreement, except those conditions, covenants and promises excused or prevented. 20. As a result of Defendant' breaches of the Agreement, Leprino has and s

continues to suffer damages in an amount according to proof. Damages include, but are not limited to, costs of delay, cost overruns and claims by subcontractors and

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suppliers for unpaid materials and services in the form of mechanics lien claims, as well as attorneys'fees and costs incurred in defending against Defendant' breach of Article s 15.8 of the Agreement. 21. The Agreement provides in the event of litigation relating to the

Agreement, the prevailing party is entitled to recover attorney fees and costs. SECOND CLAIM FOR RELIEF (Negligence / Negligent Misrepresentation) 22. Leprino incorporates the allegations contained in paragraphs 1 through 21

above as if fully set forth herein. 23. Defendant undertook to perform construction and related activities

pursuant to its obligations as set forth in the Agreement. 24. Defendant knew that if it failed to exercise reasonable care in performing

its duties, it would cause damage to Leprino as a result, including additional costs, liens, lawsuits, legal fees, revenues and income opportunities. 25. Defendant failed and neglected to perform its functions, duties and

responsibilities in a reasonable manner, and generally acted below the standard of care of a reasonable contractor, and breached their contractual and legal duties of care to Leprino. 26. Defendant had a duty to keep Leprino informed about all aspects and

phases of the Project. At various times throughout the term of the Project, Defendant provided information of material fact to Leprino, including information concerning the status of the Project and its ultimate completion date, which Defendant knew or should have known was false. Defendant supplied that information to Leprino to influence its 11

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decisions regarding, among other things, completion of the Project and the beginning of production at the facility. Leprino justifiably relied on the information provided by

Defendant and incurred damages as a direct result thereof. 27. As a direct result of Defendant' negligence, Leprino suffered damages in s

the form of legal fees in defending subcontractor and supplier claims, liens upon Leprino' real property, claims and demands for which Leprino is not responsible and s other matters subject to proof at trial. Moreover, Defendant' delay has significantly and s adversely impacted Leprino' production from its project, and therefore caused Leprino s to lose production because the project was completed substantially later than the schedule provided for in the Agreement. Defendant never requested an extension of time, and the project was delayed substantially beyond the contract completion date called for in the contract. THIRD CLAIM FOR RELIEF (Contractual Indemnity) 28. Leprino incorporates the allegations contained in paragraphs 1 through 27

above as if fully set forth herein. 29. As a proximate result of the negligent acts of Defendant and the acts

constituting a breach of contract by Defendant, Leprino was forced to hire attorneys to defend claims made by subcontractors and suppliers against the project. 30. Defendant owes Leprino a contractual duty to defend and indemnify

Leprino from costs, fees, consultant fees, architectural costs, attorney fees and other expenses associated with defending claims for payment made by subcontractors and suppliers of Defendant of any tier. 12

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31.

Defendant owes Leprino a duty to defend and indemnify all such claims

and to provide release bonds for any and all mechanics liens filed against the project by Defendant' subcontractors and suppliers of any tier, including undocumented claim for s payment. 32. Leprino asserts its rights to indemnity with respect to all damages, fees,

attorney fees and costs associated in any way with the defense and indemnity of any claims against the project. FOURTH CLAIM FOR RELIEF (Common Counts/Unjust Enrichment) 33. Leprino incorporates the allegations contained in paragraphs 1 through 32

above as if fully set forth herein. 34. Defendant became indebted to Leprino for monies Leprino paid Defendant

and Defendant' subcontractors in excess of that which was owed under the s Agreement. 35. No part of the money due and owing by Defendant to Leprino has been

paid, and therefore Defendant owes Leprino the amount it was paid on the project in an amount according to proof at trial, but not less than the jurisdictional limit of the court.

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DEMAND FOR JUDGMENT WHEREFORE, Leprino respectfully requests that the Court enter judgment in its favor and against Defendant as follows: A. Awarding Leprino such actual, compensatory, consequential and

incidental damages as it has suffered as a result of the above described conduct alleged in each of the Claims for Relief set forth above; B. For further actual and consequential damages for the cost to

defend and indemnify claims made by subcontractors and suppliers unpaid by Defendant and Defendant' subcontractors and suppliers on the project in an s amount according to proof at trial; C. For actual and consequential damages as a result of Defendant' s

delay in delivery of the project in an amount according to proof at trial; D. For consequential delay damages in the form of additional

overhead and costs as a result of deficiency caused by the failure to timely deliver the project to Leprino; E. Awarding Leprino all other costs it has incurred and will incur in this

action, including expert witness fees and attorneys'fees in accordance with the Agreement and applicable law, together with pre-judgment and post-judgment interest; and F. For such other and further relief as the court may deem proper.

Leprino demands a trial by jury on all issues so triable.

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Respectfully submitted this 1st day of July, 2005. LEPRINO FOODS COMPANY

By:

s/ Michael G. Bohn One of Its Attorneys Michael G. Bohn Bret M. Heidemann Campbell Bohn Killin Brittan & Ray, LLC 270 St. Paul Street, Suite 200 Denver, Colorado 80206 Telephone: (303) 322-3400 Facsimile: (303) 322-5800 [email protected] [email protected] Patrick T. Markham, Esq. Jacobson & Markham 8880 Cal Center Drive, #100 Sacramento, California 95826 Telephone: (916) 854-5969 Facsimile: (916) 854-5965 [email protected]

CERTIFICATE OF SERVICE I hereby certify that on the day 1st of July, 2005, I electronically filed the foregoing SUPPLEMENTAL AND AMENDED COMPLAINT AND JURY DEMAND with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email addresses: Francis (Frank) J. Hughes [email protected] Patrick Quinn Hustead [email protected]

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Peter J. Ippolito [email protected] Richard Carl Kaufman [email protected] John David Mereness [email protected] Daniel James Nevis [email protected]

and I hereby certify that I have served the document to the following non-CM/ECF participants by depositing said document in the United States mail, postage pre-paid, properly addressed to: Federal Insurance Company P.O.Box 1615 Warren, NJ 07061-1615 s/ Cori Atteberry Cori Atteberry, Legal Assistant

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