Los Osos sewer contractor sues county for $15 million

March 18, 2014

lososos sewerBy JOSH FRIEDMAN

A Los Osos Wastewater Project contractor has sued San Luis Obispo County, demanding payment of at least $15 million dollars in damages for uncompensated construction work. In the suit, Construction firm ARB Inc. is demanding damages totaling more than 50 percent of its sewer construction contract with the county, which amounts to $26.2 million.

ARB alleges that inadequate planning by the county caused its workers to undergo numerous tasks not accounted for in its contract. County officials then refused to compensate ARB for the extra work and instead threatened to withhold payment for contracted duties.

Costa Mesa attorney Steven Nichols filed suit on behalf of ARB in San Luis Obispo Superior Court on February 26.

“The county has repeatedly refused to pay for the additional work necessitated by differing site conditions and documented plan errors,” according to the lawsuit.

ARB alleges that upon submitting change orders, or requests for compensation for extra work, the county refused to investigate the circumstances that prompted the demands. Sewer workers discovered numerous underground facilities and construction interferences not shown in contract documents, according to the lawsuit.

After ARB submitted change orders, the county retaliated by threatening to withhold compensation for contractual duties if the firm did not make concessions on its claims, according to the suit.

But, ARB did not concede its demands. The firm filed an official claim, which the county denied, and then sued last month for breach of contract and breach of implied warranty.

ARB claims the county violated several sections of the Public Contracts Code, as well as a section of the California Government Code, by refusing to compensate the firm for the work changes.

The construction firm is suing for no less than $15 million in damages, as well as for interest, penalties and attorney’s fees. The lawsuit did not specify what construction obstacles led to the work changes.

Nichols did not return a call when asked what accounted for the $15 million in added costs.

In March 2013, ARB workers encountered a Chumash burial ground while digging trenches in its construction area. The workers then hand-dug the area to avoid damaging human remains and Chumash artifacts.

ARB likely incurred additional costs, as well, by piping water it removed from trenches to a field in the center of town in order to help replenish the aquifer. The other sewer construction contractor, W.A. Rasic, merely dumped the water it extracted into Morro Bay.

Critics of the sewer project also suggest that ARB has had to pay workers considerable overtime due to poor planning by the county.

The sewer project, which broke ground in late 2012, still is not complete. ARB could back out of its duties if it does not receive compensation that it demands.

The county has already gone $10 million over budget on the project, and contingency funds, which are largely tapped, will not cover the damages ARB is demanding.

ARB’s suit also includes 50 unnamed defendants.

Some speculate the lawsuit will prompt W.A. Rasic to sue the county as well.




  1. givemeabreak says:

    mbactivist….you hit the nail on the head “DUMB ENOUGH” = Morro Bay Mayor Jamie Irons, Councilmembers Smuckler and Christine Johnson. MB is pretty much SCREWED with these 3.

    (3) 3 Total Votes - 3 up - 0 down

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