Breach of Contract – Construction Settlement – Published Settlement

November 6, 1998
Breach of Contract
Earthquake Damages
Claimant retained $20,700 for roofing repairs and $1,500 for pick-up work. Claimant agreed to pay respondent $12,905 retained on account of the performance bond premium and $3,500 retained for pick-up work.
Case I.D. Confidential.
American Arbitration Association / August 24, 1998.
Deborah Rothman / American Arbitration Association.
Plaintiff – Gary N. Schwartz (Standard, Blender & Schwartz, Woodland Hills).
Defendant – Micheal J. Schwartz (Rapkin, Gitlin & Moser, Tarzana).
Claimant, a townhome owner’s association, and respondent, a construction contractor, had entered into an agreement for certain repairs resulting from the Northridge earthquake. When the work was substantially complete, claimant retained a portion of the contract amount. Claimant contended that respondent had overcharged it, charging a strait 2 percent of the contract price instead of passing on the actual cost of the performance bond; that respondent’s subcontractors damaged the new roof on a number of the units; and that respondent failed to complete certain pick-up work. The respondent contended that in a fixed-price, as opposed to cost plus, construction contract, it had the right to charge a percentage of the contract price for the performance bond, and that such a practice yields a price reasonably close to the actual cost of the bond; that there was no evidence that respondent’s subcontractors had been the ones who had damages the roof tiles; and that it had sent workers on four different occasions to complete the pick-up work, so that any work not completed was no longer its responsibility. The plaintiff brought this action against the defendant based on a breach of contract theory of recovery.
The matter was mediated before Deborah Rothman of the American Arbitration Association on August 24, 1998. Had the matter not settled, it was scheduled for AAA arbitration.
Copyright 1998 Daily Journal Corp. Reprinted with Permission.