Facts

Claimant Nicholas Davis operates a high-end cosmetic dental office in Newport Beach. When an adjacent office became available, claimant leased that office space for the purpose of combining the two suites into a single, seamless dental office. Claimant obtained design plans from a third-party designer as well as obtained plans for the location of dental equipment to be installed.

Design plans were provided to respondent Pacific Inland Construction. Respondent was responsible for obtaining engineering plans [electrical, mechanical, plumbing and Title 24-energy consumption]. Respondent retained JMS for these engineering plans. Respondent also retained the services of JMS to modify the design plans originally prepared by AYC Design. Respondent undertook the obligation for design modifications and worked hand-in-hand with JMS to modify AYC Design's plans consistent with claimant's desired results.

Claimant and respondent entered into a construction contract dated Nov. 28, 2006 for the amount of $172,238. On Jan. 5, 2007, respondent began work on the project. On June 11, 2007, claimant terminated respondent, and six months later, hired another construction company to finish the project.

CLAIMANT'S CONTENTIONS:
The plaintiff contended that respondent not only breached the contract but was negligent in all aspects of performance on the project; failing to obtain accurate engineering plans; failing to correct noted errors in the design plans; failing to properly construct the modifications to the adjacent suites in every respect. The plaintiff further contended that respondent unreasonably delayed in starting the project, and thereafter in completing the project, resulting in substantial out of pocket damage to claimant.

According to claimant's counsel: Respondent Manuel J. Ortega represented himself as an expert in dental office construction. On April 2, 2005, respondent submitted a buildout quote for $89,797 to complete the project. This quote included a reserve of $4,500 for preparation of plans necessary for submittal and city approval.

In October of 2005, six months after the plans were provided to respondent, respondent submitted the plans to the city of Newport Beach Building Department. In late 2005, respondent notified claimant that the city had re-zoned Suite 101, and that the suite was no longer zoned for "general office/medical/dental" as it had previously been zoned [and as claimant's original suite was zoned]. Respondent stated that it was going to take additional time to get a conditional use permit from the city for the necessary re-zoning. At least six months passed with respondent claiming he was working with the city on the re-zoning, while in actuality, respondent did nothing towards the project.

On Sept. 27, 2006, respondent pulled the permits to begin the project. Two months later, in November 2006, respondent informed claimant that respondent was able to obtain the necessary building permit over the counter without the necessity of a conditional use permit or having Suite 101 re-zoned. However, it was later learned through the testimony of an employee of the city that no re-zoning was ever required, and that the delay of over one year was due to respondent's overbooking of jobs and not due to any delays related to zoning issues on the part of the city of Newport Beach.

For the first time on Nov. 28, 2006, respondent submitted a contract to claimant to sign for this project. The contract was for $172,238, more than twice the amount of the original buildout quote. Claimant, having had to pay lease payments of $2,323 per month since December 2004 on Suite 101 while waiting for the re-zoning, felt compelled to sign the contract as stated in order to get the project completed at this inflated price. The Nov. 28, 2006 contract did not contain a schedule of completion showing when the project would start, the anticipated progress, and when the project should be completed barring unforeseen circumstances.

Despite the fact that the contract was signed in November 2006, and the permit issued in September 2006, respondent did not begin work on the project until Jan. 5, 2007. Even after respondent began work on the project, his work was sporadic and unpredictable. Once the project began, the situation deteriorated. The dental equipment supplier provided the respondent with templates to show exactly where the dental chairs would be situated. These templates also showed the location to respondent to properly run electrical, gas, and water lines to the dental chairs. However, respondent misplaced the location of these electrical, gas, and water lines to operatory number 1. Upon learning of this error, respondent represented he would correct the problem. However, respondent simply made the same mistakes again, placing the utility lines in the wrong location.

Respondent further constructed the entryway in violation of the ADA, having built the framing without consideration of the finishing, which made the hallway/entryway too narrow. Respondent also combined wood and metal framing randomly despite the fact that the contract required metal framing. There were numerous other failures on the part of respondent with respect to the project. The final straw being respondent's negligent construction of the ceiling, causing a significant drop between the ceiling in the new suite and the ceiling in the original suite. At this time, respondent was terminated from the project, and claimant retained another contractor.

In response to respondent's contentions regarding zoning, the arbitrator specifically made a finding that the city building department witness was "credible" in that the delays were not based on any zoning issue. Furthermore, the arbitrator specifically found that "due to other more pressing work this job was not given the attention" it should have been given. There was no misunderstanding of words.

Also, while respondent's counsel contends that claimant's contentions regarding workmanship were inaccurate, the arbitrator specifically found in Claimant's favor on ALL such issues, and stated so in his award. "This arbitrator overall accepts the analysis of Mr. Cheatham and Mr. McDaniel [claimant's expert and contractor] as to the deficiencies of work and/or deviation from plans without approval or change orders." The arbitrator then awarded $50,000 for the negligent work of respondent.

RESPONDENT'S CONTENTIONS:
The defendant contended that his work on the project was not negligent, and that all construction was per the plans. There was no breach of contract by respondent. Respondent further contended that the delays on the project were not his fault, but due to an issue with the city related to the resulting parking calculation requirements. Respondent spent "hundreds of man hours" to obtain the permits. Respondent further sought damages in a cross-claim in the amount of $115,000 for lost profits on other jobs while working on this project and for money allegedly due for work actually performed on this project.

In response to claimant's zoning allegation: There was no finding that respondent misrepresented to claimant anything related to zoning or re-zoning. Claimant raised this claim due to a gross misunderstanding of words. In fact, claimant's architect conceded that he initially thought zoning was an issue but later agreed it was not.

Claimant contended that due to overbooking of jobs, respondent caused a delay of over one year. However, the arbitrator's award found there was only a delay of six months.

Similarly, many of claimant's contentions regarding the allegedly inflated price of the contract, the deficiencies of the contract, and the workmanship issues were not found in the arbitrator's award and are not accurate.

Result

Arbitrator found in favor of claimant and awarded damages plus attorney fees and costs. Claimant obtained an award of $65,071 in damages, $62,966 in attorney fees, and $43,152 in costs including expert costs. According to respondent's counsel: Claimant included a alter ego assertion against the corporate RMO. The arbitrator found the alter ego allegation was not established against the individual RMO. Arbitrator denied all cross-claims of respondent.

Other Information

According to respondent's counsel: With respect to the alter ego contention, respondent will be filing a malicious prosecution claim against both the claimant and his attorney. FILING DATE: January 2008.