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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 03-cv-02669-MSK-PAC LEPRINO FOODS COMPANY, Plaintiff(s), v. BIG-D CONSTRUCTION CORP. - CALIFORNIA, a Utah corporation, BIG-D CONSTRUCTION CORP., a Utah corporation, and Does 1-100 inclusive, Defendants/Counterclaimant _______________________________________________________________________ BIG D. CONSTRUCTION CORP. - CALIFORNIA, a Utah Corporation, et al, Third Party Plaintiffs v. MARELICH MECHANICAL CO, INC., d/b/a/ UNIVERSITY MARELICH MECHANICAL, a California Corporation, Third Party Defendant. _____________________________________________________________________ MARELICH MECHANICAL CO, INC., d/b/a/ UNIVERSITY MARELICH MECHANICAL, a California Corporation, Third Party Plaintiff/Counter claimants, v. BIG-D CONSTRUCTION CORP.- CALIFORNIA, a Utah Corporation, .et al, Counter defendant/Third Party Defendants ______________________________________________________________________ FINAL PRETRIAL ORDER
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1. DATE AND APPEARANCES The final pretrial conference was held on March 3, 2006, pursuant to Fed. R. Civ. P. 16, and the parties were represented as follows: LEPRINO FOODS COMPANY: Michael G. Bohn Bret M. Heidemann Campbell Bohn Killin Brittan & Ray, LLC 270 St. Paul Street, Suite 200 Denver, Colorado 80206 (303) 322-3400 (phone) (303) 322-5800 (fax) [email protected]
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This action arises from the construction of an approximately 490,000 square foot mozzarella cheese plant in Lemoore, California. Leprino Foods Company is a Colorado corporation (hereinafter " LFC" in the business of manufacturing, processing, ) storing and selling mozzarella cheese and related products. 1.Summary of Background Facts · Project name-Lemoore West. · Location of Project-Lemoore, California. · Owner-LFC Foods Company, a Colorado corporation. · General Contractor-Big-D Construction, a Utah corporation. · Approximate Cost of Big-D Work-$140 million. · Lead Mechanical Subcontractor- Marelich Mechanical, aka University Marelich Mechanical-UMM. · General Contract between LFC and Big-D o Signed on 9/22/00 o Compensation was cost plus 4.5% fee. o General Conditions (field overhead) can not exceed the guaranteed maximum price (GMP) of $2,703,792 (Article 1.4.28). o Contract substantial completion was 2/1/02. o Actual substantial completion was 12/9/02. · UMM Subcontract with Big-D o Bid 3/1/01 o Lump sum bid and subcontract it $20,519,300 o Subcontract signed 7/25/01 2. LFC Statement of Claims
Big-D entered into a Construction Contract with LFC (" General Contract" on the ) September 11, 2000, agreeing to be general contractor in constructing Lemoore West. The final General Contract document was signed on September 22, 2000. A construction schedule, Project drawings and specifications and conditions of the contract (including, but not limited, to General, Special and other Conditions) were included as part of the Agreement. Importantly, Big-D entered into the Prime Contract agreeing that " Project will commence and will proceed before Drawings, the Specifications and other Contract Documents are completed and fully developed . . . and completion of such documents . . . will occur as construction is progressing." The General Contract provided " Substantial Completion"would occur on February 1, 2002. Based on this, LFC planned to start cheese production on May 8, 2002. Actual substantial completion occurred on December 9, 2002 (meaning LFC had beneficial use of the plant and Big-D substantially demobilized from the project). Actual cheese production started on January 27, 2003. LFC' schedule expert is Robert Groves of s 3
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the internationally recognized consulting firm, Navigant Consulting. He calculated the total delay to substantial completion caused by Big-D was 251 days. LFC suffered damages from the delay as follows: Lost profit Excess plant costs Construction OH Total $14,047,577 $ 1,640,981 $ 1,320,783 $17,009,341
LFC contends Big-D breached Article 3.1 (and related Contract sections) by failing to timely deliver the Project. LFC further contends Big-D' breach includes, but s is not limited to, breaches of the additional General Contract obligations by: LFC contends that Defendant Big-D breached the terms of the General Contract by, among other things, the following: A. Big-D failed to complete the entire Work described in the Contract documents for the " Cost of the Work"as defined in the General Contract, plus a fee, also as defined in the General Contract and failed to manage the Work in the manner prescribed by the General Contract, including but not limited to, failing to use its best efforts to accomplish the Work in conformance with, and as contemplated by, the Contract Documents, failing to properly schedule, failing to require updated schedules from its subcontractors, failing to require timely " built"drawings, failing to process Requests as for Information (" RFI" in a timely fashion, failing to properly sequence and organize the ) Work in the most efficient and cost effective manner, failing to inform the owner of potential claims, and failing to handle proposed changes to avoid close-out disputes and liens. B. Big-D demanded payment for money not otherwise due under the General Contract; specifically, Big-D has sought payment for (1) un-remedied defective Work, (2) the same Work being double billed by multiple subcontractors, (3) payments to reimburse subcontractor Marelich Mechanical Co., Inc. d/b/a Marelich Mechanical (" UMM" for Work by UMM that fell within UMM' original scope of Work, and therefore ) s not reimbursable or warranted, (4) funds appropriately withheld from payment by LFC under the terms of the Prime Contract, (5) funds withheld by LFC to off-set claims made by subcontractor UMM for funds well in excess of any approved or submitted change order request and to whom such funds are not due, such claims being the result of Big-D' breach of contract, (6) funds withheld due to actual and consequential s damages of roughly $17 million caused by the delay in completing the Project, (7) funds withheld as a result of damages caused by Big-D' other breaches of the contract s which include Big-D' effort to avoid its General Contract under Article 15.8 to litigate in s Colorado, (8) breaches of Prime Contract (and related Contract Document provisions) 4
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Articles 1.3, 2.1, 2.4, 3.4, 4.1.3, 4.1.6, 9.1.6, 11.1, 11.9, 11.10, 11.12, and 15.8, among others, and (9) breaches of the General Conditions to the Prime Contract including but not limited to Section 38.1, 38.2, and 38.3. LFC seeks damages against Big-D of the portion of the $17 million in damages caused by Big-D breaches of contract, according to proof at trial, and in accord with various provisions of the General Contract including 4.1.3, and Section 31.1 of the General Conditions to the General Contract. C. Big-D failed to properly coordinate the Work with that of all other contractors and LFC, and in a manner that would facilitate the efficient completion of the entire Project. Big-D failed to properly supervise and manage the Project to avoid unsubstantiated and baseless claims by its subcontractors; e.g., UMM. D. Big-D also failed to require all of its subcontractor agreements to conform to the terms of the Prime Contract. Big-D failed to assume responsibility for the acts and omissions of its subcontractors, their agents and employees. E. Big-D has further breached the General Contract by, among other things, not complying with the specifications, terms and conditions of the General Contract, in part, by not meeting the schedule set forth in the General Contract, by allowing substantial cost-overruns, including those related to subcontractors hired by Big-D (in particularly but not limited to UMM), and by not indemnifying LFC for the damages and losses LFC 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. F. Big-D has further breached the General Contract by, among other things, not complying with the specifications, terms and conditions of the General Contract, in part, by not vigorously defending the UMM claim and by joining with UMM to prosecute what Big-D contends is a baseless claim by UMM. G. Big-D has breached the General Contract by any and all coordinated conduct between Big-D and UMM (1) during this litigation, (2) to breach the General Contract (e.g., pursuing claims of jurisdiction in California despite the clear provisions of Article 15.8 providing for Colorado law and jurisdiction), and (3) to increase Big-D' fee based s on rejected claims. H. Big-D' conduct in this litigation is itself a breach by Big-D of the Prime Contract. s This includes, but is not limited to, submitting a claim for additional general conditions costs that were not a " Cost of the Work." LFC has performed all conditions, covenants and promises required on its part to be 5
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performed in accordance with the terms and conditions of the General Contract, except those conditions, covenants and promises excused or prevented. As a result of Big-D' conduct described above, LFC seeks damages in an amount to s be determined at trial, including but not limited to, damages related to the costs expended by LFC to defend against claims made by subcontractors and suppliers and delay damages. LFC also seeks an award of its attorneys' fees, litigation expenses, court costs, and other amounts as further requested in LFC' Complaint. Such s damages shall include all consequential damages for business disruption, interruption and delay caused by Big-D' failures to properly manage the job and all fees, s expenses, and costs associated in any way with Big-D' breach of contract regarding s Article 15.8, choice of forum clause. This will include all litigation and related costs of underlying motions and appeals in California, including costs associated with the surety bond posted by LFC. LFC 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 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. Consequently, LFC will argue at trial that the various Big-D entities are the alter ego of Big-D Construction Corp.-California. 3. LFC Defenses to Claims Made by Big-D
The Prime Contract provides any delay caused to the job by LFC is compensable to Big-D by an extension of time only and there shall be no damages for delay. Big-D alleges LFC was responsible for delay, but Big-D failed to seek an extension of time. Near the conclusion of the project, Big-D asserted a claim for damages due to delay. Big-D premised its claim on two essential grounds. First, Big-D claimed the project built was substantially different than the project planned. Big-D claims therefore its incremental cost to manage was higher than could have been anticipated. Thus, Big-D seeks compensation to increase the monthly allowance for fixed general conditions. This is the claim for " additional"general conditions. Second, Big-D claims the project was delayed by design and other owner driven changes, and thus claims the right to " extended"general conditions. Big-D also seeks payment of its contract retention.
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The claim summary is as follows: 1. 2. 3. 4. Claim for increased GC $ 2,067,137.00 $ $ $ $ $ $ 382,479.00 318,928.00
Unfunded subcontracts, labor, and invoices PCO (unnumbered) - Extended Overhead UMM (miscellaneous)
11,009.00
Subtotal Big-D claims Big-D Retention Total Big-D claim
2,779,553 3,521,214 6,300,767
LFC denied the claim because the factual predicate, delay or added expense being caused by an LFC act or omission, never occurred. In the same regard, the sole or concurrent delay of Big-D precludes any recovery for alleged delay damage. Any delay, and therefore increased GC expense, was caused by Big-D and its subcontractors. The claim is not and cannot be paid because it does not meet the General Contract definition of a compensable " Cost of the Work." Additionally, Big-D' s superintendent stated ongoing job problems with subcontractor UMM caused most of the increased GC cost. Big-D is liable for its subcontractor' negligence, and this s cannot be a " cost of the work" Big-D accepted the job with the plan of spending . roughly $700,000 on GC' that would not be recoverable. This added cost was s planned and not caused by delay or otherwise. It also cannot meet the definition of the " Cost of the Work." The General Condition (hereinafter " ) claim is premised in part on an alleged GC" delay caused by LFC. However, the General Contract prohibits damages for delay. Big-D agreed there would be no damages for delay, and that Big-D' only remedy is an s extension of time. General contract, general conditions section 45.5 states: The Contractor agrees that, whether or not 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 7
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delays. c. Any damage, loss or expense resulting from interruptions to, or suspensions of, its Work to enable other Contractors to perform their work. Assuming, solely for the sake of argument, Big-D had a legal right to pursue the increased GC claim, the claim is not permitted because it is untimely. See General Contract general conditions article 43-45. To the extent Big-D contends its increased GC claim is premised on added items of work, LFC contends Big-D is estopped after the price of that work was negotiated and agreed (as evidenced by the signed change order) to increase the cost after the fact. LFC relied that all costs were in the proposal for a change order and relied to its detriment to have Big-D do the work. Moreover, the General Contract does not permit further and untimely requests for more compensation after the fact. By the terms of the General Contract any request for further compensation is waived, and the condition precedent to pursuit of a claim failed. Big-D recently asserted for the first time that many of its claims and defenses (since they do not comply with the contract) are permitted because of a contract abandonment theory. The theory is the contract was abandoned because the project size, cost and schedule was changed. LFC contends abandonment is not legally viable because the alleged contingencies were contemplated in the contract, and as a matter of law, the abandonment allegations are not legally viable (see Scott Co. of California v. MK-Ferguson Co., 832 P.2d 1000, 1004 (Colo. App. 1991). Second, LFC contends the Big-D is collaterally or judicially estopped from asserting contract abandonment. Third, that the General Contract is an enforceable contract is the law of the case. Assuming for the sake of argument " abandonment"was a viable theory to Big-D, LFC contends that Big-D' acceptance of contract benefits obligates it to the contract s obligations. Additionally, Big-D misreads the law because it contends that abandoning a provision (e.g. Big-D claims LFC failed to deliver one schedule) amounts to an abandonment of the entire agreement. LFC contends this is factually wrong, but even so, it does not result that Big-D can ignore the contract when convenient and enforce the balance. Finally, " abandonment"much like a rescission must be based on unequivocal conduct by both parties, and there is no such conduct by either party. Big-D contends LFC is in breach for failing to pay the final retention, but (1) on balance, Big-D owes LFC and therefore, there is no balance due. (2) Notwithstanding LFC' claim, the General Contract permits withholding funds for third party claims. s Big-D' subcontractor UMM asserted a meritless claim, and therefore LFC had the right s to retain the funds.
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LFC further asserts the following defenses: Big-D has failed to mitigate its damages, if any; LFC' duty to perform under contract was discharged by virtue of s Big-D' prior multiple breaches of contract; Big-D' Amended Counterclaim is barred in s s whole or in part by the doctrines of waiver and/or estoppel; Big-D' Amended s Counterclaim is subject to an offset and/or set-off; Big-D' Amended Counterclaim are s barred in whole or in part by the doctrine of unclean hands; LFC incorporates its allegations made in its Complaint filed in this action; LFC also contends that it has been judicially determined that the Prime Contract is enforceable and that Colorado law applies to resolution of this controversy and, therefore, Big-D is precluded from seeking relief under any lien or other laws of California. Likewise, Big-D now asserts its common counts were premised on a theory of abandonment. This theory was not pled in the counter-claim and should therefore not be an issue. If it is permitted, the so-called " abandonment"claims are barred by the doctrines of collateral estoppel, judicial estoppel and law of the case, and LFC denies generally and specifically any such claims. Moreover, a surety bond was posted by LFC which further extinguishes lien claims against LFC' real property by the terms of that bond. There is no California s mechanics' lien, and neither the statutory penalties, nor the California mechanics' lien is recoverable and therefore justiciable in Colorado. LFC asserted certain defenses to Big-D' California lien, but contends neither s the lien nor California defenses apply. As a result, LFC intends to withdraw all defenses based on California law upon a finding by this Court that California claims and defenses are not at issue. California defenses that otherwise would apply are that Big-D failed to give a proper 20-day notice sufficient to support the claim of lien pursuant to California Civil Code Sections 3097 and 3114. Big-D is therefore barred from recovery therein; Big-D' Amended Counterclaim is time barred by Big-D' failure s s to comply with the provisions of California Civil Code sections 3097, 3097.1, 3114, 3115, 3116 and any and all other related time requirements in perfecting Big-D' lien or s stop notice, including the amount of the lien or stop notice. The stop notice is inapplicable since there is no lender. LFC alleges that if California law were to apply, which it does not, the causes of action alleged by Big-D' in its Amended Counterclaim s are barred by the provisions of the applicable statute of limitations, Code of Civil Procedure section 340(3) and the related timing provisions of the mechanic' lien law, s Civil Code sections 3097, 3114, 3144, 3147. Moreover, these code sections are inapplicable since the bond is governed by the Order of Dismissal of the California action and the referenced federal statutes and rules. The parties agreed Colorado law applies, and California law is inapplicable to the dispute. D. Defenses to Claim by Big-D to Indemnify Claims Made by UMM
The original approved subcontract amount is $20,519,300. After approved 9
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changes, the UMM subcontract amount is $20,337,928. The claim for additional compensation submitted by UMM is $16,159,760, roughly 80% of the original contract. The claim was categorized and broken down by UMM' consultants as follows: s 1. Outstanding Change Estimates 2. Loss of Productivity not on CE's 3. Disputed Backcharge Change Orders 4. Labor Rate Escalation Costs 5. Increased Field Overhead 6. Extended Field Overhead 7. Detailing Impacts 8. Unabsorbed/Unallocated Office Overhead 9. Subcontractor Claims Melrose Metals, Inc. PCI 10. Cost of Money Impacts Delinquent Billing Payments Delinquent Change Estimate Payments Late Retention Payments $187,723 $818,125 $260,790 $1,266,638 $ 320,600 $16,159,760 $311,339 $348,746 $660,085 $9,472,797 $ 209,378 $ 126,072 $ 249,924 $1,058,774 $1,450,325 $ 77,693 $1,267,474
11. Project Closeout Issues Total UMM Claim
LFC denies the costs were incurred, denies the amount, denies they were properly calculated, denies LFC caused, and therefore is responsible for the expenses, and denies Big-D has a right under the General Contract for reimbursement. The claim was modified slightly in discovery, but generally follows the above categories. LFC is also not responsible for indemnification because of the defenses set forth above, and 10
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additionally as follows: 1. The claim is not subject to reimbursement because, among other things, the claim does not meet the definition of a " Cost of the Work,"as set forth in the General Contract. 2. Pursuant to Article 11.10, Big-D is required to conform the Subcontract to the General Contract, and LFC is not liable to Big-D for Big-D' breach if it failed to do so. s 3. UMM, by failing to timely submit its claim, caused Big-D to fail to timely submit its claim for the above, and therefore the condition precedent failed and the claim and right to reimbursement was waived. 4. UMM' failure to submit a CE before undertaking the work as required by the s General and Subcontract induced LFC to rely on the price of the work and to permit UMM to undertake the work. UMM is estopped to assert any claim after LFC relied to its detriment. 5. The claim and expense is excluded pursuant to General Contract Article 9. 6. UMM misstated and overstated its claim and expense. LFC denies any claim, but even assuming damage, the method of calculation is not sufficiently reliable to establish damage to UMM 7. UMM failed to accurately calculate the claim.
8. The claimed expenses were caused in substantial part by UMM' failure to follow s the instructions to bidders or otherwise properly bid the project, thus caused by UMM' s own fault. 9. UMM concurrently delayed the project and therefore cannot recover damages.
10. The General Contract does not permit damages for delay and UMM never requested an extension of time. 11. UMM seeks damages for delay, and damages for delay are not a " cost of the work"for which Big-D may be reimbursed. 12. UMM breached its subcontract and otherwise failed to perform all conditions, covenants and conditions on its part to recover. 13. UMM has a custom and practice of underbidding jobs to create claims and 11
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litigation. 14. Under the express terms of the General Contract, 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 General Contract. s LFC further asserts the claims for which it moved for partial summary adjudication should not be issues at trial, but are issues in the litigation. B. Big-D and Federal Insurance Company' Statement of Claims and Defenses. s
The current litigation involves the competing claims of three parties regarding the construction of the Lemoore-West Plant (the world' largest mozzarella cheese-making s facility) in Lemoore, California (hereinafter the " Project" The Project' owner is ). s Leprino Foods Company (sometimes called " LFC"or " Leprino" Big-D Construction ). Corp - California (called " Big-D"herein) was the Project' general contractor for the s " shell"structure and for certain utilities (such as steam, chilled water, potable water, etc.) that would connect with the process and cheese-making equipment to be installed by Leprino and its separate vendors. University Marelich Mechanical (called " Marelich" or " UMM"herein) was one of Big-D' mechanical subcontractors on the Project, and s was generally responsible for a substantial portion of the Project' piping and ductwork. s
Each of the parties seeks an affirmative recovery. To identify the issues, claims, and defense from Big-D' point of view, the case is s divided into five sections: (1) Background Facts; (2) Claims by Big-D against Leprino; (3) Claims by Leprino against Big-D; (4) Claims by UMM against Big-D; and (5) Claims by Big-D against UMM. 1. Background Facts
Big-D is a licensed general contractor under the laws of the State of California. Prior to contacting Big-D, Leprino originally planned to use another general contractor to construct the Project. In late July/early August 2000, after participating in the ground-breaking ceremony and just before grading work was scheduled to begin, Harris Construction, Leprino' original general contractor for the Project, balked. Harris s had just finished constructing another dairy processing plant for Leprino in Tracy, California, and was unwilling to sign another contract with Leprino. Having been left in the lurch, Leprino contacted Big-D, whose representatives flew on short-notice to Lemoore, California to discuss Big-D stepping-in to replace Harris. At 12
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the initial meetings, Big-D' representatives were given a limited amount of information s about the Project, much of which ultimately turned out to be incorrect. Big-D was informed that the magnitude of its work on the Project would be approximately $60-$80 million. They were shown a footprint of the Project, but because many of the details had yet to be conceived or designed by Leprino, Big-D was not immediately asked to commit to a total price. Rather, Leprino requested Big-D to agree to a fixed percentage of the eventual construction costs as a fee, and to prepare a budget for the supervision costs that would be necessary to construct a dairy-processing facility whose cost would be in the range of the $60-$80 million that Leprino had quoted. Big-D had just completed the construction of a similarly-priced dairy facility, and in response to Leprino' request, created a detailed budget identifying the manpower assumptions s that went into its pricing. In order to understand the ultimate agreement between Leprino and Big-D, a basic understanding of the Project is first required. Big-D' work on the Project (the " s Work" ) was to be the shell of the Project' structure, plus certain other improvements, including s boilers, piping and ducting to provide a number of " utilities"like steam and chilled water. Big-D' Work, however, was ultimately less than one-half of the cost involved in s making the plant operational. The principal cost of the Project involved the design, manufacturing, placement, and hook-up of the sophisticated " process piping and equipment"that was intended to take raw milk, convert it into various types of cheese and whey, and then to package and store that product. All of this processing work was to be done by Leprino and its separate contractors. In addition to the process piping and equipment work that Leprino separately undertook, the operation of the plant also required Leprino to construct a new wastewater " pre-treatment"plant to avoid violating California state regulations limiting the discharge of untreated water, which is a natural by-product of the cheese and whey-making process. The entire Project, which included both Big-D' Work and Leprino' processing work, s s was divided into two phases. The Phase 1 generally corresponded to the " cheese-making"portion of the plant. Phase 2 generally referred to the " whey-processing"portion of the plant. In September 2000, Leprino and Big-D signed the document titled " Contract Agreement No. 3357"(hereinafter the " Contract" On its face, the Contract-which was drafted by ). Leprino-states that it is for the " Cost of the Work without a Guaranteed Maximum Cost." The Contract referenced and incorporated a number of General and Special Conditions, including a number of attachments. As part of the Contract, Leprino agreed to prepare a comprehensive Project Schedule (Attachment ` to the Contract), based G' on the schedules delivered to Big-D before the Contract was signed. In theory, the comprehensive Project Schedule would show not only Big-D' Work, but also all of s 13
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Leprino' processing work so that the entire Project could be coordinated. When Big-D s signed the contract on September 11, 2000, Leprino was supposed to provide the comprehensive Project Schedule by September 20, 2000. To date, however, it has never been supplied. Further, according to the Contract, the Project was to be " tracked"in the sense that fast Big-D was to be authorized to begin certain elements of construction before Leprino completed all of the necessary design work. In its initial meetings with Leprino, Big-D had expressed concern about committing to completion dates for a project which was not yet fully designed, and where Big-D had not yet been authorized to enter into any subcontracts. Since the design of the Work and the authorization to enter into subcontracts was entirely within Leprino' control, Big-D discussed the need for s Leprino to avoid interfering with the efficient progress of the Work.In Article 3.8 of the Contract, some of Leprino' duties of cooperation were identified. First and foremost, s the design needed to be completed by specific dates so that as soon as the design was released, the following steps could occur: (1) the design documents would be delivered to Big-D; (2) Big-D would put the design documents into a bid package and release them to subcontractors for bidding; (3) Big-D would review the bids, and submit the results to Leprino for further assessment; (4) Leprino would then authorize the work by issuing an internal Authorization for Expenditure (" AFE" document and providing ) Big-D with an Owner Change Order permitting Big-D to actually subcontract for the work; and (5) the selected subcontractor would then be able to immediately commence the authorized scope of work. For example, once Leprino completed the design documents for the grading work, it would release this portion of the design to Big-D as a Bid Package. Big-D would obtain pricing for the grading from subcontractors. Leprino would review and approve the subcontractor bids, and would then authorize Big-D to start this portion of the work by issuing an AFE and Owner Change Order. In theory, before Big-D finished with the first portion of the work, Leprino would finish the design and release the next portion of the work, which would then proceed without interruption. With regard to completion, the Contract initially set forth a " substantial completion"date for Big-D' Work of February 1, 2002, and a " s final completion"date for Big-D' Work of June 1, 2002. As set forth below, Leprino not only extended these s completion dates, but almost universally breached the express and implied obligations of the Contract. 2. Claims by Big-D Against Leprino
Big-D' affirmative claims against Leprino consist of the following eight categories of s claims and/or damages: (a) Unpaid Contract Balance. Disregarding Big-D' disputed claims for additional s 14
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compensation and disregarding the owner' disputed claims for damages for delay, it is s undisputed that there is an unpaid contract balance due Big-D of approximately $4 million ($3,922,000). The unpaid contract balance itself is not disputed. The additional ways that Leprino materially breached the Contract are set forth in Part 3.B.3(a), where Big-D sets forth how Leprino failed to fulfill its own contractual obligations to Big-D. (b) Increased And Extended General Conditions. " General Conditions"are those costs incurred by Big-D on the Project site relating to supervising and managing the Work, and include the salaries of project managers, engineers, and superintendents, as well as costs related to job trailers, etc. The General Conditions claim is approximately $3 million. The recovery is calculated on two alternate bases: (1) agreed labor rates, or (2) the " reasonable value"(i.e., quantum meruit and/or indebitatus assumpsit) of the General Condition costs based on the theory of contract abandonment (discussed in more detail below). There is no dispute that Big-D actually incurred the General Condition costs it is seeking. The additional General Conditions are based on Leprino' agreement to s equitably adjust the General Conditions based on Big-D " finishing strong,"to use the words of Leprino' own personnel. The facts prove that Leprino was not only aware of s the additional General Conditions that Big-D was incurring, but told Big-D that it would compensate Big-D for these costs at the end of the Project. Despite this commitment, Leprino has claimed that it can escape liability for these costs for the following three reasons, none of which are ultimately persuasive. First, LFC claims that the General Conditions were subject to a " Guaranteed Maximum Price." The words " Guaranteed Maximum Price"(" GMP" are used with respect to the ) General Conditions. But the issue of the GMP for General Conditions is specifically addressed in article 1.4.28 of the Contract. It is not a limitation on General Conditions for the Project; rather, it is a limit on General Conditions for twenty-four months of work. Article 1.4.28 reads: " which total costs are not to exceed $2,703,792.00 OVER A 24-MONTH PERIOD. Consequently, Big-D is entitled to additional and extended General Conditions beyond the contemplated 24-month period of time. Second, LFC claims that Big-D did not submit a request for additional compensation for the General Conditions within 7 days of September 2002, the time when Big-D allegedly exhausted the " GMP." The facts disprove Leprino' argument. Big-D s submitted written notice of these additional costs prior to September 2002. Moreover, under doctrines of waiver, estoppel and modification, Leprino advised Big-D in writing to wait until the end of the Project to resolve the General Conditions issue. " Finish Strong!"was the language used by Leprino' director of construction. The written s 15
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communication from Leprino is merely one of the ways in which the words and conduct of Leprino constituted wiaver, estoppel and/or modification and re-defined the method by which the issues of General Conditions would be resolved. Third, Leprino claims that the recovery of additional General Conditions are barred by a " damage for delay"clause in the Contract. " damage for delay"clauses, though no No enforceable, are viewed as a forfeiture, and are narrowly construed. There are numerous standard exceptions to no damage for delays clauses, most of which are applicable to the immediate situation. Those exceptions are set forth and discussed in Big-D' Response to Plaintiff' Motion for Summary Adjudication. More significantly, s s the majority of the additional General Conditions costs Big-D incurred do not arise from the " delay"of the Project, but result from the massive increase in the scope of the Project. In that sense, the General Conditions claim is not just for extended performance, but also for the performance of additional work; e.g., more work requires more supervision and therefore more costs. (c) Additional Reasonable Costs of the Work. The Big-D claims are supported under two alternate theories. The first theory is the detailed analysis of costs to the events that produce them. The second is that the owner' conduct has created s abandonment, entitling the contractor to a quantum meruit recovery. Under an abandonment theory, Big D is entitled to additional costs incurred on the Project. Abandonment will be proven by comparing the fundamental nature of the Project that Big-D was initially asked to perform, with the nature (e.g., size, complexity, duration, and dollar-amount) of the Project that Leprino ultimately demanded that Big-D construct. Leprino has, and undoubtedly will continue to contend, that the change order provisions in the parties' Contract account for the change in Project scope, size, and duration. While it is true that construction contracts almost universally account for some changes to the scope of the work, the sheer number and fundamental nature of the changes Leprino required constitute an abandonment of those Contract procedures in this instance. Big-D will prove at trial that the scope of work nearly doubled in cost, from $60-$80 million, to more than $140 million. There were more than 500 change orders issued by Leprino to Big-D, the vast majority of which were not issued to Big-D until after February 1, 2002 (the date when Leprino claims that it wanted Big-D to be substantially complete with the Work). If abandoned, the California law will apply to the parties' dispute as the law of the state with the strongest connection to the transaction (e.g., as the location of the Project). Furthermore, despite ordering the Work, Leprino refused to pay for a number of Unfunded Change Orders totaling $523,965.64. (d) Pass-Though of Valid Portion Of UMM' Claims. As indicated, the Contract is a s pure " Cost-Plus Without a Guaranteed Maximum Price"agreement Thus, if it turns out that Big-D is responsible for some dollar amount to UMM (as discussed below), 16
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Leprino will be liable for that amount to Big-D as part of the " Cost of the Work"as described in paragraph 5.1 of the Contract (which defines costs). By directing Big-D to use UMM' bid, Leprino benefited between $2-$5 million. Big-D advised Leprino that s UMM' bid was far below the price of the other mechanical subcontractors. s (e) Mechanics' Lien and Bond claims. Big-D recorded a timely, proper, and valid mechanics' lien, and has sued to foreclose upon those lien rights. As a condition precedent to dismissing Leprino from the lawsuit originally filed by Big-D in California, the District Court for the Eastern District of California ordered Leprino to post a mechanics' lien release bond. Leprino posted that bond, which (in place of the Project) now secures both Big-D' mechanics' s lien rights and any eventual recovery by Big-D against Leprino. (f) Bond Costs. UMM filed a mechanics' lien on the property. In response to a demand from Leprino that the lien be removed, Big-D responded immediately and posted a mechanics' lien release bond issued by Federal Insurance Company. The cost of the bond premium is $30,625.00 per year and has been in place since the mechanics' lien was filed in January 2003, for a total expenditure of $124,000. This is a cost of the work under the Contract for which Big-D is entitled to reimbursement. (g) Attorneys' Fees. The Contract awards attorneys' fees to the prevailing party. By stipulation, the fees are to be awarded by the Court after the principal action is tried to a jury. (h) Interest. Interest is due on the unpaid contract balance, Unfunded Change Orders, on the late monthly progress payments, and, in the discretion of the court, on the other items of affirmative recovery. Interest at the 10% legal rate totaled more than $2 million as of January 2006. 3. Claims by Leprino Against Big-D
Leprino' claims against Big-D are set forth above, in Part 3.A of this Pre-trial Order. In s essence, they can be distilled into four assertions: (1) Leprino claims that it performed its obligations under the Contract; (2) it alleges that Big-D breached a material obligation under the Contract by failing to complete the work in a timely manner; (3) as a result of Big-D' alleged breach, Leprino suffered damages by way of its inability to s produce and sell cheese; and (4) Leprino, who drafted the Contract identifying the Contractor as " D Construction Company - California"should nevertheless be Big permitted to renegotiate/reform the Contract as if they had contracted with Big-D Construction Company and/or Big-D Capital Corp., separate legal entities from Big-D Construction Company - California. Big-D denies each of these claims and asserts the 17
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following defenses. Nothing herein shall be deemed to shift the burden of proof to Big-D on issues where the burden of proof ultimately rests with Leprino. (a) Leprino Materially Breached and Thus Failed to Perform its Obligations Under the Contract Without limitation, Big-D contends that Leprino materially breached the Contract by, among other conduct: (i) Failing to Pay for the Work: With regards to payment for the Work, Leprino materially breached the Contract by refusing to pay the final balance due Big-D under the Contract; failing to make timely progress payments during the Project; refusing to make payment after promising that Big-D would be paid if Big-D secured the release of or bonded around UMM' mechanics' s lien; imposing conditions and other obligations on payment that were not part of the Contract, including, without limitation, the requirement that sale tax information be submitted, requiring that lien releases and supporting documentation be submitted for tiers and entities not required by the Contract, and by making excessive demands for information in progress billing statements; and by failing to cooperate in making timely payments to permit the continued progress of the Work. (ii) Preventing Timely Completion of the Work: Leprino materially breached the Contract by failing to timely complete concepts and designs for the process piping and process equipment thus impacting the design and construction of the Work by Big-D; by the late release of design documents for the Work Big-D was to perform; for the failure to release the design documents to Big-D in accordance with the various schedules for the Project; by the multiplication of the number of anticipated Bid Packages; by providing Big-D with incomplete and erroneous design documents for Bid Packages that were allegedly ready for bidding by subcontractors; by failing to issue timely AFE' and Owner Change Orders in response to subcontractor bids, by failing to s timely respond to Requests for Information; by refusing to permit Big-D to accurately convey scheduling information to subcontractors; by withholding scheduling information about the work to be performed by Leprino and its own contractors and by refusing to coordinate that work with Big-D; by refusing to cooperate in resolving issues on the Project so as to permit the timely completion of the Work; by the failure to employ adequate design staffing, particularly during the construction phase of the Project, and in particular to ensure that both Phase I and Phase II of the Project' design were s completed timely and did not interfere with one another; and by adopting adversarial management styles and other conduct inconsistent with the objective of achieving the objective of " fast-track"construction with aggressive completion dates. (iii) Failing to Provide Schedules: Leprino materially breached the Contract by 18
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failing to provide Big-D timely scheduling information, including, but not limited to, a Project Schedule as required in Attachment G to the Contract, and to provide information for the performance of work by Leprino' other contractors, including the s delivery of process equipment. (iv) Refusing to Grant Reasonable Extensions of Time: Leprino materially breached the Contract by, contrary to the express and implied terms of the Contract, refusing to permit reasonable extensions of time, but instead demanding that time extensions be deferred while demanding that Big-D " drive"the Project schedule and otherwise accelerate the Work or lessen the impact of owner-created delays. (v) Requiring Excessive and Untimely Changes: Leprino materially breached the Contract by requiring Big-D to perform excessive changes, the majority of which were not ordered by Leprino to be performed until after Leprino claims that Big-D was required to have reached Substantial Completion; by requiring pricing requirements that were inconsistent with the timely completion of the Work; failing to adequately identify changes in the work on the Project' plans and specifications; and by ignoring s the chain of privity and demanding that Big-D' subcontractors price and perform s additional scopes of work without Big-D' involvement in the change order process, by s performing excessive value engineering and re-pricing of Bid Packages, including delays in the pricing of the Project pipe rack and Bid Packages 8, 9, and 10. (vi) Failing to Timely Solve Design Issues: Leprino materially breached the Contract by failing to promptly solve design problems and issues, and by demanding that Big-D and its subcontractors provide design solutions. (vii) Interfering with the Progress of the Work: Leprino materially breached the Contract by issuing excessive and inconsistent directions concerning the sequencing and priority of Big-D' Work directly to Big-D and directly to its subcontractors. s (viii) General Conditions: Leprino materially breached the Contract by refusing, despite repeated oral and written representations to the contrary, to equitably adjust Big-D' compensation for extended and additional general conditions. s (ix) Conduct Towards UMM: Leprino materially breached the Contract by failure to advise UMM of potential errors in its bid, by directing Big-D not to advise UMM of the extent to which their bid was below other mechanical bidders for the Project; and by refusing to consider and/or negotiate pricing, claims, and requested Change Estimates from UMM in good faith. (b) Big-D Fulfilled Its Own Contractual Obligations 19
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Contrary to Leprino' claims, Big-D did not breach the Contract. Each of the alleged s " breaches"claimed by Leprino are disputed and will be disproved at trial. Without limitation, the following address some of the reasons why Big D' performance was not s in breach, and alternatively, why Big-D' performance was either excused or s discharged. (i) Leprino Modified the Dates of Completion: Leprino modified the dates for Substantial and Final Completion of the Project from February 1, 2002 and June 1, 2002, respectively, by issuing Big-D written, approved Change Orders that extended the time of performance through at least November 2002. By continuing to pay Big-D after Feburary 1, 2002, Leprino ratified Big-D' continued performance. Further, the s concepts of " Substantial"and " Final"Completion were modified and abandoned by Leprino, who resequenced the critical path of the Project to include not only Big-D' s Work under the Contract, but also Leprino' own process piping and equipment work. s As indicated above, Leprino substantially modified both the scope and timing of Big-D' s Work by issuing hundreds of Change Orders after the February 1, 2002 date when Leprino alleges that Big-D should have reached Substantial Completion. Therefore, to the extent that the dates for Substantial and Final Completion were not modified, Leprino prevented Big-D' performance and abandoned the Contract. Abandonment s was specifically pleaded by Big-D as its Twenty-Third Affirmative Defense in response to Leprino' Amended and Supplemental Complaint. s (ii) Big-D Properly Notified Leprino of Requests for Additional Time and Compensation: The Contract contains no obligation to submit written Potential Change Orders (" PCO' ) requesting extensions of time or additional compensation. In any s" event, Big-D did submit-and Leprino expressly approved-timely requests for extensions of time and for additional General Conditions. Moreover, Leprino specifically directed Big-D not to request specific extensions of time, but rather instructed Big-D to " drive" the Project schedule to attempt to mitigate the effects of owner-caused delays. Any failure on the part of Big-D to submit written requests for time or compensation are therefore excused and/or discharged by Leprino' waiver of the notice provisions, on s which it is now estopped from relying. (iii) Big-D is Not in Breach for Passing Through UMM' Claims: Big-D has not s demanded payment for claims by UMM that are for work not performed by UMM. At Leprino' direction, Big-D has aggressively disputed UMM' claims. Prior to submitting s s UMM' claims, Big-D reviewed them and informed Leprino that it questioned UMM' s s entitlement to additional compensation. It is only to the extent that UMM is found to be owed additional amounts that these costs are sought to be recovered as " Costs of the Work"under the Contract. 20
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(iv) Prosecution of Lawsuit: Big-D did not breach the Contract by filing an action in King' County, California. Per California statutory law, the only location where Big-D s may file its action and preserve its mechanics' lien is the county in which the Project resides. Nor has Big-D breached the Contract by pursuing a legally recognized avenue of appeal to contest Leprino' dismissal from the California lawsuit by the s District Court for the Eastern District of California. Big-D' expedited appeal to the s Ninth Circuit is currently pending. (c) The Cause of Leprino' Alleged Damages are Unproved: s There is a lack of causation between the alleged Big-D breaches claimed by Leprino, and the damages it seeks to recover. Leprino has not sought to prove that the alleged failure of Big-D to " substantially complete"the Project by a particular date caused it damages. Rather, Leprino has sought to prove that its own inability to " make cheese" is the cause of its damage. Leprino' ability to make cheese, however, was dependent s on the completion of at least three separate elements of work: (1) Big-D' completion of s a structure sufficient to permit Leprino to begin to set its process equipment in place; (2) Leprino' actual installation and successful operation of its process equipment and s process piping; and (3) Leprino completion of its wastewater pre-treatment facility sufficient to permit it to lawfully operate the Project and its Lemoore-East plant without causing excessive pollution in violation of California environmental regulation. The delays by Leprino to each of these separate elements constitutes concurrent delay, thus precluding Leprino from any affirmative recovery against Big-D for delay damages. Further, Leprino has failed to identify any percipient or expert witness who has knowledge of and who has actually performed a critical path method analysis of the Project schedule, and will thus be precluded from offering any such testimony at the time of trial. (d) There Is No Basis to " Pierce the Corporate Veil" :
Contrary to Leprino' claim, there is no basis for renegotiating or reforming the s language of the Contract identifying Big-D Construction Corp. - California as the Contractor. Leprino will be unable to prove a legal basis for disregarding the recognized corporate distinctions between the various Big-D entities. First, Leprino' s " expert"witness, Brian Hall, has offered no admissible opinions that there is a basis for " piercing the corporate veil"such that any of the other Big-D entities named by Leprino should be held liable for any judgment ultimately obtained against Big-D. Second, Leprino, a sophisticated entity experienced in dealing with contractors in arms-length negotiations, drafted the Contract and specifically identified the entity it agreed to contract with as Big-D Construction Corp. - California. Leprino had the opportunity to investigate Big-D prior to contracting and to protect itself by requiring a performance 21
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and/or payment bond. Third, Big-D California is a separately licensed general contractor. Fourth, there are legally recognized and legitimate business reasons for Big-D' corporate structure. Fifth, there is no merit to Leprino' unfounded allegations s s that Big-D ignored the corporate formalities, or co-mingled funds with the other Big-D entities. And finally, Big-D California was not under-capitalized, and always maintained sufficient assets in the form of cash on hand to meet current liabilities. 4. Claims by UMM Against Big-D
UMM' sub contract balance was paid in full by Big-D. Only disputed claims comprise s UMM' alleged damages. UMM is advancing their disputed claims under two s alternative theories of recovery. The first is an attempt to directly prove costs related to certain claimed changes. These are identified as Change Estimates (" s" UMM' CE' ). s second approach is a quantum meruit claim based on theories of contract abandonment and a modified total cost method of recovery. UMM' claims appear to s include the following elements: (1) UMM performed its obligations under the subcontract, including satisfaction of conditions to claims, changes, extensions of time, and payment; (2) Big-D allegedly breached material obligations under the subcontract, including providing misleading schedules to UMM; (3) as a result of alleged breaches by Big-D, UMM suffered damages, which can be proven by the pricing of individual CE' by jury verdict method, or on a modified total cost basis for recovery which s, assumes that none of the costs incurred by UMM were the result of UMM' own s actions, inefficiencies, or other problems; (4) alternatively, UMM claims the subcontract was abandoned, thus entitling UMM to recovery in quantum meruit; and (5) UMM has a valid mechanics' lien and release bond claim against the bond provided by Federal Insurance Company. In response, and without limitation, Big-D denies these contentions and asserts the following defenses. Nothing herein shall be deemed to shift the burden of proof to Big-D on issues where the burden of proof ultimately rests with UMM : (a) UMM did not perform its obligations under the subcontract, including satisfaction of conditions to claims, changes, extensions of time, and payment: Specifically, Big-D contends that UMM materially breached the parties' written subcontract by, among other conduct: (i) Failing to perform within the time frames or durations provided in the schedule included with its bid package; (ii) Failing to reasonably cooperate in preparing mutually agreeable schedules during the Project; 22
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(iii) (iv)
Failing to follow instructions to bidders; Refusing to meet the schedules provided during the Project;
(v) Failing to perform its work, including submittals, procurement of equipment and material, and work in the field in a timely and workmanlike manner; (vi) Failing to price potential change order work, or actual or potential changes in a timely, reasonable, and good faith manner; (vii) Failing to accurately keep records of actual costs; (viii) Failing to timely and properly submit claims for additional time and/or compensation; (ix) (x) (xi) Failing to work overtime as required; Failing to adequately staff the Project; Failing or refusing to perform work within its scope;
(xii) Performing its work in a way that made the work of other trades more expensive or longer in duration; and (xiii) Failing to reasonably cooperate in accommodating prospective changes to its work as required by Big-D or Leprino. (b) Big-D did not breach material obligations of the subcontract: without limitation, Big-D asserts that it fulfilled all obligations of it required under the parties' written subcontract, including: (i) Big-D did not mislead or deceive UMM by providing improper schedules or scheduling information. UMM had access to all available schedule information provided to Big-D and to the Project site, and was thus aware of the status of the Project for several months prior to executing the written subcontract; (ii) Big-D has made all required payments to UMM in a timely manner; and
(iii) UMM' failure to cooperate prevented and interfered with Big-D' s s intended scheduling efforts and prevented Big-D' complete and timely performance on s the Project as intended. 23
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(c) UMM has not demonstrated damages flowing from actual or alleged breaches by Big-D. Without limitation, Big-D asserts that UMM' claims are further subject to the s following failures of proof and/or defenses: (i) UMM CE' are improperly priced; s
(ii) UMM costs are inaccurate, and UMM failed to keep accurate costs related to the Project; (iii) of work; UMM is seeking additional compensation for work actually within it scope
(iv) UMM has sought improper elements of recovery, including without limitation: expert costs; attorneys' fees prior to determination of the prevailing party; costs for UMM' forces involved in litigation and claims preparation; home office s overhead, including without limitation, calculations under an Eichleay formula; interest on unliquidated claims; and additional profit in the form of inaccurately calculated labor burden. The claim advanced by UMM is inflated, arguably late, and to a significant degree, the result of self-inflicted problems. The inflated nature of UMM' claim is evident from a simple comparison of its s alleged job costs and its claim. UMM' own project cost records indicate that its actual s out-of-pocket losses on the Project do not exceed several million dollars, and do not even come close to approaching the $16 million UMM is claiming. The documents which allegedly set out UMM' " s project costs"are inflated and generally unsupported. There are unexplained cost transfers, and costs allegedly incurred months, and sometimes years, after the Project was allegedly completed. A substantial portion of the claimed cost " overruns"experienced by UMM were the result of self-inflicted problems created by UMM during the performance of its work. The self-inflicted problems generally fall into two categories: 1) errors in UMM' s original estimating, and 2) problems with performance. The first self-inflicted problem occurred in UMM' estimating process. UMM s apparently ignored bidding instructions to bidders not to assume that pipe could be loaded into the buildings via crane through roof openings. Furthermore, Big-D has independently estimated the work, and believes that an accurate estimate at the beginning of the Project would have been more than $2 million higher than UMM' bid. s There were three other mechanical bidders on the Project. In comparison, the other three bidders were each more $5 million higher than UMM' bid. Further, UMM initially s generated a labor estimate which was approximately $1.5 million higher than its actual 24
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bid to Big-D. However, after UMM' estimating personnel went to the extent of s generating a true estimate, UMM' management, apparently convinced that they had to s have a lower bid to " the job,"struck the number of estimated labor hours by get approximately half and lowered their bid accordingly. Another pricing mistake UMM made was the attachment of the controls for the air-handler units. The bid documents required UMM to supply factory-installed controls. At the time it submitted its bid for the mechanical equipment, UMM received a price from the equipment supplier, Frick, a subsidiary of Yorke. Frick agreed to perform this work for less than $100,000. Based on the mistaken belief that it could save money by breaching the contract and performing this work in the field, UMM decided to field-perform the work itself. This breach of subcontract caused hundreds of thousands of dollars of additional expense to UMM as its forces were dedicated to finishing the control work for the air handlers rather than completing other work. In addition to problems with its pricing and estimating, and ill-advised decisions in " buying out the project,"UMM caused additional damage to itself in the field performance of its work. UMM did not order the necessary materials in time for installation. Further, additional costs were incurred because of extended re-work required of UMM because of poor workmanship. (v) UMM is unable to prove and has inaccurately calculated its " Modified Total Cost Method"of recovery and has included costs arising from its own problems, including: errors or miscalculations in its bid and estimate; costs arising from the actions of its own forces, and its own subcontractors, suppliers and vendors; and (vi) UMM has unclean hands, precluding it from seeking an equitable adjustment to the subcontract. (d) The Subcontract was not abandoned. As an issue of fact, the subcontract was not abandoned, and UMM is not entitled to recovery in quantum meruit As an issue of law, UMM is estopped from claiming abandonment of the subcontract. (e) UMM' Mechanics' s Lien Claim is Invalid. UMM does not have a valid mechanics lien, and thus does not have a claim against the mechanics' lien release bond. UMM' s lien was willfully overstated and is thus void under California law. UMM' mechanics' s lien was recorded prematurely. 5. Claims by Big-D Against UMM
Big-D' Third-Party Complaint against UMM states a number of claims stated as a s 25
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declaratory relief action, and pleaded in the alternative, but are based on the following legal theories of recovery: (a) General Conditions Not Recoverable Against Leprino: Leprino claims that the principal reason that Big-D' general conditions were substantially higher than s estimated is that UMM was a poor subcontractor who required excessive supervision. Big-D' assistant project managers and superintendents spent a substantial amount of s time either reviewing UMM' requested change orders (either CE' or PCO' and s s s) overseeing their work. If UMM is correct in its affirmative claims, this additional supervision was an inherent aspect of the changes initiated by Leprino. If not, Big-D is seeking these additional costs from UMM as the additional general conditions costs to supervise UMM' work would not be recoverable by Big-D from Leprino. s (b) Indemnity from Leprino Claims. If Big-D is unsuccessful in defeating Leprino' s claims for delay, Big-D is seeking indemnity from UMM under a strong indemnity clause of the parties' written subcontract for any damages, delays, or additional costs attributed to UMM' conduct on the Project. s (c) Additional Attorney' Fees and Defense Costs. Similarly (again in the s alternative), Big-D is seeking the experts' fees and attorneys' fees spent defending against Leprino' claims arising fro
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