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Home My WebLink About07/24/1975Pledge Roll Call MINUTES SPECIAL CALLED MEETING OF THE CITY COUNCIL CITY OF SAN LUIS OBISPO JULY 24, 1975 - 5:00 p.m. COUNCIL CHAMBERS, CITY HALL PRESENT: Myron Graham, Steven Petterson and hlayor Kenneth E. Schwartz ABSENT: T. Keith Gurnee and Jesse Norris City Staff PRESENT: J.H. Fitzpatrick, City Clerk.; A.J. Shaw, Jr., City Attorney; Wayne Peterson, City Engineer; D.F. Romero, Public Services Director Witnesses PRESENT: Wayne Peterson and D.F. Romero ------------------------------------------------------------------------------- 1. The City Council met in Special Called Session to consider the suspension of the contract between the City of San Luis Obispo and Charles A. Pratt Construction Company for WATERLINE RECONSTRUCTION, South Broad Street, City Plan No. 21 -75. The reason for consideration of suspension of the contract was the failure of the contractor to execute the work on the project with diligence and force specified and intended in by the terms of the contract. (See transcript dated July 24, 1975, Halter Langer, reporter; Exhibit "A" attached.) Exhibit "B" attached - Utilities Encroachment Permit Exhibit "C" attached - Letter from [leaver Attorney to Wayne Peterson Exhibit "D" attached - Letter from A.J. Shaw to Wayne Peterson 1 Exhibit "E" attached - Letter from Mr. Weaver to A.J. Shaw Exhibit "F" attached - Letter from Mr. Pratt to Payne Peterson Mayor Schwartz continued the meeting to 12:10 p.m., July 25, 1975. APPROVED: October 6, 1975 H. 2tzpatrick, City Clerk .,t. T _ _ ........ ot9T. CO. SLO 227 7.6/12.9 OS .. STATE OF CALIFORNIA DEPARTMENT. OF TRANSPORTATION UTILITIES ENCROACHMENT PERMIT To City of San Luis Obispo p, 0, Box 321 CA 93406 San Luis Obispo, San__Luis__Obispo -_ -_ -, California Dated- -- - - - - -- March-- 31----------- Attention Paul.Lan� ell Jr. ermfttee end, to the terms and conditions Relating to Utility Encroachments California, Department of Transportatio, which. by this reference is made a part 1. Subject first to the applicable law, and sec issued by the State o n hereof, permission is hereby given to watermains and appurtenances on State Route 227 Relocate existing Plan - within the City of San Luis tObisP (yaofsSann Luis 1Obispo'snsp an No. 21 -75 and described cations. s ecifica- In addition to the City specifications, the following p . tions will also apply: Route 227 must be maintained at all 1. Two -way traffic on State times. 2. No open trenches allowed overnight. 21 -75. in accordance with your attached Plan o -------- .- 2. This Permit has been issued by the Department pursuant to: 19 Compiefe � ( ) Your Application of ---- .-------------- -------------- . ...... ......... . . 19 _75 .. Proper (X) Utility Notice No of _._ riarch__21___. -. 19 - - - -. ( _ ........... ....... - - - - -- - - - - -- - - - - - -- Line 1 ( ) Agreement No....... - - of_- - 3. This Permit applies only to the work specifically Piho 1 (IX )hove. 4. lnshcction rcquircd by Division —Full ( ) . This do 11 shall be void unless the worknlessctitme extension provided granted bylseparate Rider. completed tw prior.- .to_ -. State_ ... .............. =erations Highway contractor's op DEPARTMENT OF TRANSPORTATION DISTRIBUTION: HOP: jams 'bite to Permittce cc -HOP to Mtce. Superintendent MLV E. F. _ Y -- GREGOR------------- -- eadquarters— NItce. WWE meer fsrn sr ctnr ra n9Y�rtntlon Utility Lnfi TBR -Insp . ...... ............ ................._. � District Permits E incer rA )y. V w ti w incorporated Terms and Conditions may be obtained upon request.) F'YtrTRTm nor [ST. 8111. 3]119 -900 !•11 f0M '• 1f 1 1 1 1 BERNARD S. CROSSMAN (1925 -1968) GERALD C. WEAVER PAUL A. GEIHS ZI -�5 LAW OFFICES CROSSMANI WEAVER & GEIHS POST OFFICE BOX 155 TELEPHONE 640 OOLLIVER STREET 773 -4601 PISMO BEACH, CALIFORNIA 93449 AREA CODE 805 July 23, 1975 Mr.-Wayne A. Peterson City Engineer's Office City of San Luis Obispo 911 Palm Street- San Luis Obispo, CA 93401 Re: Broad Street Waterline Reconstruction Project Dear. Mr. Peterson: Our firm represents Charles A. Pratt Construction Company which has forwarded to us your letter of July 18, 1975, together with the contract documents and preceding correspondence and I must confess that I am at a complete loss to understand your letter and would appreciate your advice as to what provisions in the specifications and contract documents you are relying.upon in making the statement "I feel there is no basis for any claims for additional compensation for backfilling and digging out in the travel way areas ". The only provision that I can find that you might possibly be referring to is subsection II of section 11, the construction details, stating: "Any trench or portion of trench that must be traversed by traffic shall be temporarily paved with cold -mix asphalt paving material immediately upon com- pletion-of backfill operations." As I interpret the above provision, it simply means that the contractor must provide cold -mix asphalt paving as temporary paving upon completion of its backfill opera- tion, but I cannot see how this could be interpreted to require the contractor to perform that operation each day. There is nothing in the specifications which requires him to backfill trenches each day except to the extent such backfilling.might be necessary to provide access to and over driveways to houses,.lots and buildings along the line of work or as may be necessary to provide temporary approaches to crossings or intersecting streets. However, even if some EXHIBIT "C" 1 Lam' Mr. Wayne A. Peterson temporary backfilling might be access to and over driveways, would require such backfilling during construction. -2- July 23, 1975 necessary in order to provide there is no provision which to be paved with cold -mix The main problem is that the State requirements (which were not made part of the specifications) decidedly and materially changes the character of the work from that on which the contractor based his bid price, and he is therefore under the contract entitled to an adjustment in compensation based on the difference between the actual unit cost,to perform the work as originally planned and the actual unit cost of performing the work as changed. I do not purport to be an expert in waterline construc- tion, but have enough familiarity with the subject to be convinced that my client knows whereof he speaks when he says that such a requirement materially changes the cost of the work from the manner in which waterline construction is normally performed because of the impossibility of maintaining efficient production and added labor costs made necessary by requiring backfi.11ing and cleanup crews to stand around while trenching and laying operations are being performed or during-periods of equipment repairs. I can see no way in which this problem can be remedied by any change in operation...If Mr. Kellerman's letter of July 9, 1975, is going to be the order of the day and the contractor is unable to perform the backfilling operation in the evening, he is going to have to shut down production at noon in order to have the backfilling operation completed before evening. This of course would not only ruin production, it would greatly increase the contractor's costs as he would still have to pay any trenching and laying crews even though they only worked one -half day. I realize that Mr. Kellerman has suggested the contractor work Saturdays and Sundays, but Mr. Kellerman neglects to suggest who will pay the overtime costs if that is done. Of course, even if the contractor agrees to and is allowed to work in the evenings, we still have overtime costs that materially change the character of the work. In conclusion, unless there is some contractual pro- vision that would justify the statements made in your letter of July 18, 1975, it would appear that the City is attempting to impose upon the contractor costs and expenses resulting from the City's own negligence in failing to either determine the State requirements prior to letting the contract for bid or failing to include those requirements in the specifications 1 Mr. Wayne A. Peterson -3- prior to receiving and accepting bids. July 23, 1975 Thank you for your cooperation and courtesy in reviewing this letter and providing us with the information requested if you are able to do so. We understand that the contractor has shut down the job.. We feel that in this situation he has no other choice. He has not received any proposed contract change order and regardless of whether or not his cost estimate is correct, he must know whether the City will at least recognize this procedure as a material change in the character of the work pursuant to section 2 subsection R on page 2 -4. If so, he at least knows.that he will be entitled to assert and, if proven, receive payment based on the difference between the actual unit cost to perform the work as originally planned and the actual unit cost as changed, or at the option of the City on a force account basis even if no agreement can be reached at this time between the contractor and the City as to what that amount will be. We also, pursuant to section 6, page 6 -3, request a reasonable extension of time for completion due to the ' delays caused by the daily backfill, paving and cleaning requirements and due to delays caused by the City in failing to make a decision as to whether to pay on the basis of actual unit costs or by force account, or to even recognize the fact that the character of work has materially changed. We would also request that you check on payment to Mr. Pratt of the progress payment we understand your attorneys, Henderson, Goodwin, Marking & Rogers, authorized and the City Council approved on June 11, 1975, for the Higuera Street and Los Osos Valley Road_Improvements.. I was advised by Mr. Miller and Mr. Fitzpatrick that that payment should have been received by Mr. Pratt no later than Monday and it has yet not been received. Very truly yours, Gerald C. Weaver / GCW:jmc cc: Charles A. Pratt Construction Company Il�.� �i�„�� , ;;,;�► ! I;i �I ��I I j �� city Of SAn WIS OBIS PO - CITY ATTORNEY'S OFFICE ' Post Office Box 321 • San Luis Obispo. CA 93406 C 805/543 -8666 July 23, 1975 MEMORANDUM: To . Wayne Peterson, City Engineer From A. J. Shaw, Jr., City Attorn y Re Pratt Contract to Install Water ines in Broad Street It is my understanding that Pratt Construction Company, the City's contractor to install water mains in Broad Street, is objecting to a requirement of the State Department of Transportation that the trench for the water lines must be backfilled with sand and repaved at street crossings at the conclusion of each day's work. ' Since Monday, further with July 21, Mr. Pratt the work until he is has refused to proceed assured by the City that he will receive more money for this backfilling work. In effect, he is refusing to do more work until he is assured that the City will grant a change order for increased contract costs. I do not believe that a contractor has the right to cease work upon a contract in such situations. He may request a change order in writing setting forth his reasons, and he may work under protest with notice that he will file a claim and /or bring judicial action if a change order is not eventually forthcoming. I do not believe that the City should submit to this form of blackmail. Therefore, it would be my recommendation that you notify Mr. Pratt that the City will consider him in default and will employ City forces or hire other contractors to complete the project, the costs of which will be deducted from his contract, unless he proceeds by a date which you feel is necessary to protect the City's interests. I recognize that Mr. Pratt and some City and State personnel seem to believe that the backfilling and repaving requirement by the State is unusual and has not been imposed against other contractors. This is something, of course, which Mr. Pratt ' and his legal counsel may wish to prove in any actions against the City and /or State. However, this is no excuse to fail to perform his contract. AJS:ktm CC: Department of Transportation Jlzw. j , ` fit` EXHIBIT "D" BERNARD S. CROSSMAN (1925 -1968) GERALD C. WEAVER PAUL A. GEIHS LAW OFFICES CROSSMAN, WEAVER & GEIHS POST OFFICE BOX 155 640 DOLLIVER STREET PISMO BEACH, CALIFORNIA 93449 July 24, 1975 bR' JUL1915 pFF,,CE nF !�i_ C15Y i��lp;;cicY Mr. Arthur Shaw City Attorney City of San Luis Obispo 911 Palm Street San Luis Obispo, CA 93401 TELEPHONE 773 -4601 AREA CODE 605 Re: Charles A. Pratt Construction Company/ Broad Street Waterline Reconstruction Project Dear Mr. Shaw: EXHIBIT. "E" Apparently my letter of July 23 and your memorandum to Mr. Peterson crossed in the mail. I feel that the City should give deep thought to the possible consequences that might ensue both as to time and expense if Mr. Pratt is forced into a position where he has no choice but to rescind ' the contract, which he certainly does not wish to do. How- ever, if the City is going to continue to insist that he proceed in the manner he has been forced to proceed so far, a manner contrary to the specifications upon which he bid, without additional compensation, then he will have no choice but to rescind. It is not economically feasible for the contractor to proceed as he has been required to do and it is better- that he rescind 4nd take the chance of losing a lawsuit three to five . years down the road than continue as he has and face immediate financial disaster. In plain words, it is simply a question of why go bankrupt now when I can, at the very worst, stall it off for several years? i However, I feel that if the City continues to take the position it has taken without compensating Mr. Pratt either on a force account basis or on the alternative basis provided for in section 2, subsection K, on page 2 -4, then he is entitled to rescind under the long line of decisions in this State beginning with Cox v. McLaughlin, 52 Cal. 590. The latest State Court decision appears to be Integrated, Inc. v. Alec Fergusson:Electr cal-.Coritractor`, 250 Cal.App.(2d) 287, where the court again reaffirmed the proposition that in a building contract.failiire_:to':make -progress = -payments is not such a breach as will authorize a contractor to abandon ' the work and sue for damages, but it does constitute such a breach as will justify rescission and recovery of the reasonable value of labor and materials furnished. See also Winslow v. Henoch Construction Co. v. Metropolitan Water District_ (9th Cir.) 115 Fed.(2d) 25 and the recent case of U. S. v. Western Casualty EXHIBIT. "E" J Mr. Arthur Shaw -2- July 24, 1975 et al. (9th Cir.). 498 Fed.(2d) 335. In U. S. v. Western Casualty, supra,, it was held that rescission by the contractor is justified when either there is 'an unreasonable delay in making progress payments., outright-refusal-to-pay, or imposi tion of new and onerous conditions to jpayment, and of course in obtaining recovery quantum meruit for the reasonable value of work heretofore performed, the contractor would not be limited to the existing contract prise.. We would ask, for the benefit of all concerned, that the City reconsider and reassess its position. Very truly yours, Gerald C: W aver GCW : jmc cc: Wayne A. Peterson ' City Engineer's Office' City of San.Luis Obispo 1 CHARLES A. PRATT Construction Company P Y I In PIPEUNE AND UTILITY CONSTRUCTION City of San Luis Obispo 990 Palm Street San Luis Obispo, Ca. 93401 Attention: Mr. Wayne Peterson Gentlemen: July 14, 1975 Re: Claim for additional compensation for changes in character or work on our Broad Street Water Line Reconstruction Project In accordance with our meeting of July 10, 1975, with regard to the above matter, and subsequent meeting on July 11, 1975, in which Mr. Paul Landell requested a supporting breakdown of our added costs as a result of the requirements placed on ' our work above and beyond the original job specifications by the State Department of Transportation, we are enclosing the following. A.) Breakdown of our costs for 7- 11 -75, as modified to reflect only work directly attributed to 76 feet of pipe that we laid on that date. 1 B) Cost -plus work sheet for all work performed on 7- 11 -75. C) Breakdown of additional work required over contract. I would like to set up a meeting with you after you have had a chance to review the enclosed, in order that we can agree on a method of payment. Very truly yours, CHARLES A. PRATT CONSTRUCTION CO. ar es Pratt CAP:bd Encls.. EXHIBIT "F" k. ch C- I. s,_ P.O. BOX 1295 f SAN LUIS OBISPO, CALIFORNIA 93406 f STATE CONT. LICENSE No. 274974 f 805/543 -0647 CHARLES A. PRATT Construction Company PIPELINE AND UTILITY CONSTRUCTION 1. Total cost to install 76 feet 12" D.I.P. on 7- 11 -75. $3,538.14 Divided by 76 ft. Actual cost per foot $ 46.55 2. Actual bid for labor and equipment, including profit. A) Total Bid $22.02/ft. Less: ' B) Bid on Pipe & Fittings (12.36) C) Bond Costs ( .22) D) Net Bid for Labor & Equipment $ 9.44 3. % of additional costs over bid costs: = 46.55 = 493% -974- P.O. BOX 1295 f SAN LUIS OBISPO, CALIFORNIA 93406 f STATE CONT. LICENSE No. 274974 + 805/543.0647 FLEE _ PIPE LINE AND UTILITY CONSTRUCTION P. O. Box 1295 San Luis Obispo, California Phone 543-0647 e-:7:= !' -,;YJ__—DATE _— DATES WORKED ADDRESS — CITY LOCATION ATTENTION OF JOB NO. DESCRIPTION OF JOB LABOR - v mm ifi� m m HOURS ....... REG. C.T. REG. D.T. FRINGE .20L7 EOUIPMENT RENTALS 4�� m LABOR P.R. TAXES & INS. - TOOL EXPENSE a 6-^ LA OVERHEAD @ 5% LASO EXTENDED-- TOTAL REG. PR M. FRINGE EARNINGS z 2— % OF LABOR SOR R iSUB TOTAL LABOR 1 el it x) r'A SUB TOTAL 1`17 HANDLING CHARGE @ 5% I SUB TOTAL MATERIAL —17 — --------- B TOTAL EQUIPMENT RENTAL -L;7zv 4�� m LABOR P.R. TAXES & INS. - TOOL EXPENSE a 6-^ LA OVERHEAD @ 5% LASO EXTENDED-- TOTAL REG. PR M. FRINGE EARNINGS z 2— % OF LABOR SOR R iSUB TOTAL LABOR 1 el it r'A SUB TOTAL 9 HANDLING CHARGE @ 5% I SUB TOTAL MATERIAL —17 — --------- B TOTAL EQUIPMENT RENTAL -L;7zv OU13 TOTAL PM EQ ENT S_U_0TOTAiF 4�� m LABOR P.R. TAXES & INS. - TOOL EXPENSE a 6-^ LA OVERHEAD @ 5% LASO EXTENDED-- TOTAL REG. PR M. FRINGE EARNINGS z 2— % OF LABOR SOR R iSUB TOTAL LABOR MATERIALS & OUTSIDE RENTALS I Z. 7-- it r'A SUB TOTAL 9 HANDLING CHARGE @ 5% I SUB TOTAL MATERIAL —17 — --------- B TOTAL EQUIPMENT RENTAL OU13 TOTAL CONTRACTOR'S FEE 15% GRAND TOTAL ;D"g e0044"U" eOMA4" -PIPE LINE AND UTILITY CONSTRUCTION P. O. Box 1295 San Luis Obispo, California Phone 543-0647 lo, TO DATE ADDRESS —DATES WORKED CITY —LOCATION ATTENTION DESCRIPTION OF JOB JOB NO. LABOR OCCUPATION HOURS REG. O.T. REG. RATE O.T. FRINGE REG EXTENDED PR M. it FRINGE TOTAL EARNIN13S ZJ:. r EQUIPMENT RENTALS LABOR EQUIPMENT NO MRS. I RATE AMOUNT /0 P.R. TAXES 5 INS % OF LABOR TOOL EXPENSE 0 6'-• LABOR OVERHEAD (� 5% LABOR SUB TOTAL LABOR MATERIALS & OUTSIDE RENTALS 7 c-10 �10 110 TOTAL �.HANDLING CHARGE @ 5`6 /< SUB TOTAL MATERIAL TOTAL EOUIPM ENT RENTAL /"�� SUB TOTAL CONTRACTOR'S FEE 'A EQUIPMENT SUB TOTAL GRAND TOTAL