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Balfour Beatty Infrastructure, Inc. v. PB&A, Inc.

United States District Court, N.D. California

May 4, 2017

PB&A, INC., Defendant.


          William H. Orrick United States District Judge.


         This case involves disputes arising out of construction of the Transbay Transit Center in San Francisco. Balfour Beatty Infrastructure Inc. (“BBII”) has brought claims against PB&A, Inc., for breach of contract. PB&A argues that BBII's claims should be dismissed under the doctrine of judicial estoppel because BBII took clearly inconsistent positions in prior litigation with other parties involved in the Transbay project and should not be permitted to change its position now. Alternatively, it argues that under California Code of Civil Procedure section 877 it may offset the $20 million in settlement awards that BBII received, through mediation with other parties involved in the Transbay construction project, against the $18 million in damages BBII claims in this case. Since the offset amount is greater than BBII's potential damages against PB&A, PB&A argues that BBII's claims should be dismissed. For the reasons outlined below, PB&A's arguments are not convincing: PB&A has failed to demonstrate that BBII took a clearly inconsistent position in the prior litigation and section 877 is not applicable to the contract claims brought against PB&A. PB&A's motion for summary judgment on BBII's contract claims is DENIED.

         PB&A also moves for summary judgment on its counter-claim for approximately $100, 000 in unpaid fees against BBII. There is no material dispute that BBII has not paid PB&A all of the fees owed under the contract between the parties. However, since BBII may be entitled to set off these damages if it succeeds on its claims against PB&A, whether PB&A is entitled to any damages cannot yet be determined. PB&A's motion for summary judgment on its counter-claim is GRANTED with regard to liability. The damages on PB&A's claim will be determined at trial.


         A. Transbay Transit Center

         The Transbay Transit Center is a transit hub and development project located in downtown San Francisco developed by the Transbay Joint Powers Authority (“TJPA”). The architect for the Center was Pelli Clark Pelli Architects (“PCPA”). PCPA contracted with Arup North America (“ARUP”) to be the Engineer of Record for the overall project. TJPA retained URS to peer review the project's design and retained Webcor/Obayashi Joint Venture (“WOJV”) to be the general contractor for the project. Given the large scope of the project, WOJV divided construction of the Center into major scopes of work. The first scope of work was the Buttress, Shoring, and Excavation (“BSE”) package which required a prospective subcontractor to design and build the Internal Bracing to prevent movement of the Cement Deep Soil Mix (“CDSM”) Wall that formed the perimeter of the project site during construction and to design and build an Access Trestle to allow access to the work site.

         In August 2010, PB&A contacted BBII to offer its services to be BBII's designer and engineer of record on a bid for the BSE package. Oppo. Ex. B3 at 14:8-14 (Dkt. No. 119-4). On August 16, 2010, BBII provided PB&A with the prime contract specifications for the Internal Bracing and Access Trestle and asked PB&A to prepare preliminary designs for these elements. Mot. Ex. E. (Dkt. No. 110-8); Oppo. Ex. B4 (Dkt. No. 119-5). BBII's project engineer, Gardner, used some of PB&A's design work and incorporated it into his preliminary designs in preparing BBII's bid. Mot. Ex. D at 91:1-93:1, 99:2-4 (Dkt. No. 110-7). PB&A accompanied BBII during an initial meet and greet with TJPA, WOJV, and San Francisco to discuss the design concepts. Mot. Ex. G, ¶3 (Dkt. No. 110-10). BBII won the BSE bid and contracted with PB&A to complete the design-build elements. BBII Oppo. Ex. B1 at 37:3 - 38:2; 62:3-17. PB&A was BBII's Engineer of Record on the project. Id.

         B. Internal Bracing

         PB&A prepared its interior bracing design, relying on the specifications prepared by URS and ARUP. Mot. Ex. H at 17:5-18:10; Brokken Dep. Tr., Mot. Ex. I at 36:12-14. BBII submitted PB&A's Internal Bracing design to WOJV on April 22, 2011 and it was accepted and approved on June 2, 2011. Mot. Ex. J. After excavation and installation of the Internal Bracing system in Zone 1 began, the CDSM wall began to leak and move more than was permitted under the contract. WOJV and TJPA made various claims why the wall might be moving, including that there was a flaw in the bracing design. Mot. Ex. K at 2; Ex. A at 1-6. BBII responded to this claim by noting that it had limited knowledge regarding a potential flaw in the bracing design as it did not design the CDSM wall, but highlighted that “all of the loading requirements are specified in the contract documents and BBII's approved bracing design utilized these loads as directed in the contract” and that “at no point throughout the submittal and approval process for the Internal Bracing did BBII receive comments regarding this issue.” Mot. Ex. L (Dkt. No. 110-15). WOJV and TJPA directed BBII to mitigate the wall movement in Zone 1 and re-design the Internal Bracing system for Zone 4 by connecting the walers and making the walers continuous. Mot. Ex. M; Oppo. Ex. B9 at 31:23-33:16 (Dkt. No. 119-10). BBII resolved the issues in Zone 1 by connecting the CDSM wall soldier piles. Oppo. Ex. B3 (Dkt. No. 119-4). PB&A re-designed the Internal Bracing wall for Zone 4 per WOJV and TJPA's instructions, which resolved the movement issue. Oppo. Ex. B9 at 31:23-33:16.

         C. Access Trestle

         The Access Trestle Specification provided by TJPA incorporated a seismic criteria included in the bridge design which stated that “design loads shall include design for an earthquake corresponding to a ground motion with a 10% probability of exceedance in 50 years (475-year earthquake).” Oppo. Ex. B36 (Dkt. No. 119-35). BBII and PB&A's initial design for the Access Trestle was not able to meet this seismic requirement. Because the design did not meet the seismic requirements of the specification, during construction TJPA rejected the Access Trestle design and BBII and PB&A were required to revise and redesign the Access Trestle. Oppo. Ex. B12; Ex. B11 (Dkt. No. 119-13; 119-12).

         D. Contractual Claims Process

         The prime contract on the Transbay project included a claims process whereby BBII had a limited time to submit any Change Order Request (“COR”) to preserve the right to seek additional money and contractual payments related to an “occurrence.” Oppo. Ex. B13 at 36 (Dkt. No. 119-14). With the advice and cooperation of PB&A, BBII submitted CORs and claims to WOJV and TJPA regarding extra costs incurred in resolving the issues with the Internal Bracing, Oppo. Ex. B6 at 70:9-72:9, and submitted a COR and claim with regard to costs incurred redesigning the Access Trestle design, Oppo. Ex. B6 at 45:22-47:16. In making these claims BBII took the position that BBII's and PB&A's Internal Bracing design met the contractual specifications, Mot. Ex. N at 2, and that the TJPA had required BBII to revise its Access Trestle design beyond the clear requirements of the contract. BBII certified that each of these claims was made in good faith and was accurate to the best of BBII's knowledge. Mot. Ex. Q (Dkt. No. 110-19; 110-20). PB&A in turn certified the substantive basis of these claims to BBII. Oppo. B14 (Dkt. No. 119-15).

         E. DND Action

         On October 23, 2012, DND Construction (“DND”), a subcontractor for BBII who built the CDSM wall, filed suit against BBII in Superior Court for the County of San Francisco seeking unpaid construction costs associated with building the CDSM wall. Oppo. Ex. B15 (Dkt. No. 119-16). BBII filed a cross-complaint against WOJV for the same amounts claimed by DND and for declaratory action against TJPA. Oppo. B17 (Dkt. No. 119-18). It also brought claims against WOJV based on the unresolved certified claims. Id. WOJV filed a cross-complaint against BBII asserting that BBII's claims against WOJV should be asserted as pass-through claims against TJPA. Oppo. Ex. B18 (Dkt. No. 119-19). Given the number of claims and legal issues, WOJV and TJPA decided to try to resolve the claims through an alternative dispute resolution process with the Disputes Review Board (“DRB”). Oppo. Ex. B7. Because a DRB was not part of the original prime contract, it took WOJV and TJPA some time to revise the prime contract to provide for a DRB. Id. Neither BBII nor DND was a party to the DRB Agreement reached between WOJV and TJPA but BBII was allowed to participate in selecting a DRB panel. Oppo. Ex. B19 (Dkt. No. 119-20). All the parties agreed to stay the DND litigation to focus on the DRB proceedings and the case was stayed on May 22, 2013. Oppo. Ex. B20; Ex. B21 (Dkt. No 119-21; 119-22).

         F. DRB Process

         The DRB Process was voluntary, the DRB's recommendations were to be non-binding, any recommendations from the DRB regarding CDSM wall movement were agreed to be non-admissible in any future proceedings and attorneys were not permitted to speak. Oppo. Ex. B19. BBII and PB&A worked together to prepare written materials and presentations to be made at the DRB proceeding. Oppo. Ex. B7 at 103:22-104:20; 108:2-109:1. PB&A was required to assist BBII in this process per the parties' Professional Services Agreement (“PSA”), which states at section 2.3.11 that “Engineer shall advise the trade contractor (BBII) and prepare to serve as a witness in connection with any dispute resolution procedure set forth in the Contract or any other public hearing, arbitration or legal proceeding relating in any way to Engineer's services.” Oppo. Ex. B2 ¶ 2.3.11 (Dkt. No. 119-3). BBII directed PB&A not to communicate with TJPA or WOJV because the PSA required PB&A to route any communications directed at TJPA or WOJV through BBII. Oppo. Ex. B2 ¶ 2.1.3.

         The DRB met on November 13-14, 2013 to hear presentations regarding various aspects of the Transbay project, including the CDSM wall movement. Oppo. Ex. B7 at 78:18-23. At the DRB, Gardner, from BBII, and VAK, an expert BBII had retained, made presentations regarding the CDSM wall movement. Mot. Ex. BB at 111:21-113:3. PB&A's representative, Qing Liu, also participated in the process and was asked questions regarding the CDSM wall following Gardner's presentation. Oppo. Ex. B9 at 64:3-66:14. The DRB issued a recommendation regarding the CDSM wall movement on February 14, 2014, concluding that BBII was not entitled to additional compensation for the Zone 1 and Zone 4 re-designs and that PB&A's Internal Bracing design had failed to prevent CDSM wall movement. Oppo. Ex B7 at 70:17-71:8. BBII rejected the DRB recommendation and withdrew from the DRB process. Oppo. Ex. B22 (Dkt. No. 119-23).

         G. PB&A Tolling Agreement

         Following BBII's withdrawal from the DRB proceedings it sent PB&A a proposed tolling agreement to preserve claims it had against PB&A. Oppo. Ex. B23 (Dkt. No. 119-24). PB&A retained counsel who proposed a Common Interest Agreement that included a tolling provision. Oppo. Ex. B24 (Dkt. No. 119-25). This Agreement acknowledged, “Although the undersigned Counsel and their respective Clients believe that there may be certain areas in which they presently or in the future may have divergent or opposing positions, there is a mutuality of interest in a common and joint prosecution and defense of the ...

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