News Release News Release The City of Palo Alto
Communications Department
650-329-2607
250 Hamilton Ave
Palo Alto, CA 94301

9/17/2014

FOR IMMEDIATE RELEASE
PRESS RELEASE 09/17/2014
Subject :

City Takes First Legal Step Against Flintco For Damages Related to Mitchell Park Construction
Contact : Cara Silver, Senior Assistant City Attorney    650/329-2171
Claudia Keith, Chief Communications Officer    650/329-2607

Palo Alto, CA – Following a closed session of the City Council on Sept. 15, City Attorney Molly Stump announced the City will file a legal claim in the amount of approximately $9.4 million against Flintco Pacific for its failure and inability to complete the Mitchell Park Library and Community Center.  The City filed a Notice of Contract Dispute, found here, that is the first step in a legal process and includes the City’s claim for liquidated damages, credit for noncompliant work, credit for deleted work from the contract, cost of repeated inspections, and additional materials delivery charges. 

The City fired Flintco on Jan. 10, 2014 for its failure to make progress on the construction project.  On March 3, the City Council approved a takeover agreement with the project surety, and the construction firm of Big D was brought on to complete the project.  Big D is being paid by the surety and the firm has primarily completed construction of the project, which is slated for a grand opening celebration on Dec. 6.

“Now that construction is complete, we are moving forward with legal action against Flintco,” said Stump.  “We believe that Flintco’s continued failure to make progress on the project, delays in construction, shoddy work and inadequate staffing made it virtually impossible for them to complete the job.  We believe Flintco owes the City for the totality of all of these delays.”

The City’s claim includes:

  • Liquidated damages – Following Flintco’s firing, the surety on the project brought on Big D  to complete construction.  Flintco agreed to pay the City liquidated damages of $2,500 for each calendar day past the expiration of the date of completion under the original contact.  The original date of completion for the project was April 20, 2012.  The City is claiming a total of $2.2 million in liquidated damages against Flintco and its sureties.
  • Credit for noncompliant work – Prior to Flintco being fired, they were given a list of items that represented noncompliant work on the project.  The City estimates the value of these items to be $3.3 million.
  • Cost of repeated inspections, addressing defective work – Flintco had ongoing problems with the quality of its work on the project, which required multiple inspections by the City to identify and corrective defective work.  The City estimates the costs associated with defective work to be $3.1 million. 
  • Credit for deleted work – Work was deleted from the scope of the project contract, and the City has determined that $726,995 be applied as a reduction to the contract total.
  •  Remobilization costs - Flintco repeatedly told the City certain materials could be delivered to the project when in fact it wasn’t ready, resulting in extra delivery charges in the amount of $20,319.

 “While we believe that Flintco owes the City money for these damages, we anticipate that they will also be initiating legal action against the City,” added Stump.  “We expect to be involved in this legal process for some time to come.”

Following the Notice of Contract Dispute, there is a ten-day period to allow for a potential meeting between each side, followed by nonbinding mediation and finally binding arbitration.   





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