Confidential
Settlement – $1,020,000Judge
Court
Santa Clara Superior
Attorneys
Plaintiff
Anthony Marsh
(Law Office of Anthony Marsh)
Defendant
Mark J. Rice
(McNeil, Silveira, Rice & Wiley)
Robert B. Burchfiel
(Law Office of Robert B. Burchfiel)
Pamela E. Cogan
(Ropers Majeski Kohn & Bentley)
Gerard J. Donnellan
(AT&T Services Inc.)
Facts
On July 6, 1999, during the course of constructing a replacement bridge on Oakland Road, over Coyote Creek in the City of San Jose, the defendant, Foundation Constructors Inc. drove a 60-inch diameter pile through an underground concrete encased telephone duct bank. Foundation Constructors Inc. was the subcontractor for R.M. Harris Company, the general contractor on the project. The telephone duct bank contained the main telephone trunk lines between San Jose and Oakland and telephone lines which served an adjacent commercial and industrial area of northeast San Jose. The duct bank was buried about four feet underground and contained approximately 22 separate conduits which were filled with a variety of telephone coppers and fiber optic cables, including some owned by AT&T. The bridge construction was part of a Public Works Department project of the City of San Jose. The general location of the telephone duct was well known to all parties. San Jose retained R.M. Harris Company to serve as general contractor in the construction of a bridge. Harris allegedly excavated to locate the duct bank without the presence of any utility representative. Its employees discovered buried concrete, which they believed was the duct bank, but which actually was debris from a 1931 widening of the bridge. The defendant, Underground Technology Inc. (UTI) had utilized flags to mark the approximate location of the duct bank. On the date of the incident, Foundation Constructors Inc.'s pile driver stopped work upon first striking material that was believed could be the duct bank. Foundation's superintendent notified both R.M. Harris and San Jose that he thought he was in conflict with the duct bank. The pile drove through the duct bank, severing several Pacific Bell cables and lines and stretching and placing out of order the AT&T lines. Approximately 285 businesses lost their use of all telephone communication systems. Most businesses had their services installed within three to seven days, with a few businesses losing service for up to 20 days. Two named plaintiffs filed a class action lawsuit on behalf of themselves and similarly affected businesses. Pacific Bell claimed $1,189,000 in damages for cost of repair and replacement of telephone lines, loss of use of those lines, attorney's fees and interest. AT&T claimed over $50,000 in damages for loss of use of its lines. A class was certified of all businesses which had loss of use of their telephone lines. The defendants conducted discovery to determine which businesses actually claimed damages from the outage. Through the use of class action questionnaires, 42 class members responded asserting they had incurred damages. The plaintiffs and the class members claimed damages for lost profits and incidental damages for certain increased business expenses and cell phone usage, totaling $887,000 in damages. The defendants argued that the damages were speculative and overstated and that damages totaled no more than $129,000. The plaintiffs later reduced their damage claim to $779,000.
Settlement Discussions
The case settled for $1,020,000 with $425,000 paid to A1 Lumber and the class members; $575,000 to Pacific Bell and $20,000 to AT&T. Pursuant to an additional insured clause and an indemnity clause protecting the defendant R.M. Harris, the insurer for Foundation Constructors paid $900,000 on behalf of Foundation Constructors, R.M. Harris and City of San Jose, UTI paid $95,000 and Pacific Bell paid $25,000. The named plaintiffs and unnamed class members who had responded to the class action damages questionnaire received $138,892; 240 other class members received an additional $2,400. The remaining money paid to the class covered attorney's fees and costs.
Result
The Court granted summary judgment motions of R.M.Harris Company and Foundation Contractors, Inc. against the class members, finding the contractors had no duty as a matter of law because the class member businesses only suffered economic loss. The case settled after the defendants UTI and Pacific Bell also had filed summary judgment motions.
Other Information
The court granted summary judgment motions of R.M. Harris Company and Foundation Constructors Inc. against the class members, finding the contractors had no duty as a matter of law because the class member businesses only suffered economic loss. The case settled after the defendants UTI and Pacific Bell also had filed summary judgment motions. Gordon McClintock served as a special master and mediator. Retired Justice Edward Panelli also acted as mediator.
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