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.



Thank you RWQCB. This is lovely.


NO…..Thank you







They are not the bad guys here. The RWQCB and the creeps who want to drive out the less affluent residents to support development are the culprits. Los Osos was never the source of the nitrates in the Bay. That problem is caused by Morro Bay’s leaking sewage – coming from its horrendously-dilapidated collection system.


A ridiculous statement at best. Do your homework. Go back a decade or so and re-read the numerous reports, studies, and investigations regarding the effects the septic systems were/are having on the environment, specifically the water quality of not only Los Osos but Morro Bay Estuary as well.

The NEP monitoring program as far back as 2000 found poorly functioning septic systems in Los Osos to be one of the contributors of increased levels of nitrates and phosphates in the estuary.


No, pelican, it is not ridiculous at all. It is factual. I have done extensive research read dozens and dozens of various reports done over a period of many years – starting back in the nineties, and I have gotten my hands on some documents that many people have have never seen.

For example, documents covering the investigations made by one local engineer with extensive expertise include the following comments on the monitoring wells that were used to back up claims that the septic systems were the source of the nitrate problem:

“One farm that has a dense population of horses and no residual vegetation, lies uphill in close proximity to residential areas and to monitoring and supply wells. The second source is a large amount of surface water runoff from the surrounding water shed, inundating and flowing into old, improperly abandoned wells, including those installed in 1982 for Brown & Caldwell (B&C).”


“Septic systems do not channel surface water into the groundwater basin, but these wells do. Although the contamination of the groundwater through improperly abandoned wells is a matter of great concern, the more serious result of using these wells for monitoring water quality is that they measure surface water, not groundwater. This has led to the commitment of millions of dollars for a sewer for which no need has ever been established.”

That’s just a tiny, tiny bit of the documentation that disproves claims that the Los Osos septic tanks were the cause of the nitrate problem.

People worked very hard to convince everyone that the septic systems in Los Osos were the source of the nitrates, but when you look at all the real facts, you see that it was all a sham put together to convince people that a sewer system was needed – all to support development in the town.


I can only assume you actually believe in the Tooth Fairy as well?!


Sarcasm doesn’t change facts, pelican.


Everyone, less about each other, much much less.

Those that value the ability to comment here, please pay attention. Those who don’t, won’t have that ability.

? or ! moderator@calcoastnews.com


Yes, and all this as a result of faked nitrate tests made on unsealed, contaminated wells located down-gradient from a horse farm – as has been attested, in writing, by two highly-qualified local engineers.


Please elaborate if you are really surprised by this.


Why did these government people think they could run a huge project like this? How many projects like this one have they SUCCESSFULLY completed – on time and within budget? None, you say? Bingo! There is the problem.

Why would anyone let people with no track record of successfully running similar projects be in charge of something like this? Oh, that’s right – it’s not their money, it’s the Los Osos residents’ money – so why should they care if they foul things up? They can just go back to the ratepayers and demand more money.

A lot of people have always said that the plan was to make the sewer as expensive as possible in order to run the less-affluent people out of Los Osos. Then, developers could buy up their homes at bargain prices, knock them down, build expensive houses for rich people, and make a whole lot of money for themselves and their cronies.

If that was the plan, the County’s screwups, accidental or otherwise, seem to be quite consistent with it, because the costs to Los Osos residents are now going to skyrocket.


Not to mention that if you replace a house valued at $350,000 that the owner has been in for 15 years, you knock it down and replace it with a $750,000 home at current market that is more property tax for the County. This is a win for the County. Everyone be sure to thank Bruce Gibson for this community gift!


VERY good point, Slobird. The worse the County fouls this up, the more money they get. Any way you look at it, the corrupt County government wins, and the Los Osos residents lose – bigtime


The residents lost “bigtime” a decade ago when the LOCSD at the time, led the community to believe they had an alternative plan to TRI-W.

What they in fact had, was no plan. As a result, the community was confronted with lawsuits, enforcement actions, lost low interest loans and grants, and ultimately bankruptcy.

This of course led to the county stepping in and taking over the project.

Obviously not the best choice, but seemingly the only choice after 30+ years of delays.

ALL of this could have bee avoided if ONLY the county had taken a shared and obligated interest in Los Osos in the 70’s before the uncontrolled build-out began.

Sadly to this day, Los Osos remains the red headed step-child of the county.

Niles Q

There’s plenty of blame to go around and going back to the 1970s. In fact, even further back than that, as the Ottos and Redfields of Los Osos are the ones who built whole neighborhoods without putting in the sewer infrastructure in the first place.

They figured Los Osos would always be a backwater and would never get big enough to need a sewer. Then the numbered streets were filled in with postage stamp sized lots, put up side by side with no sewers, sidewalks, gutters or stormdrains. A true backwater from first design.

Barbara Wolcott should do a follow up book on the sewer. Her first one (Small Town Perfect Storm) only covered up to the State Legislature’s stepping in.

I always thought contractors were supposed to wait until the project was done before they sue. This must have been going on for months maybe years behind the scenes to get to this point. Why was this never divulged in the project’s newsletters? Because they are PR and not “News”letters.

They already burned through the contingency money? Those old plans from the CSD that the county took and put towards this project must have been crap from the start.

I feel sorry for the Los Osos residents. All of them. Time for Lois Capps, Feinstein and Boxer and Katcho to find a huge grant to cut the costs back down to manageable, say $100 million grant? That would be the fair thing to do.

As for the County’s role, this is the biggest infrastructure project the County has done probably since Lopez and San Luis Dam projects. Certainly the most complicated and costly. Only Los Osos was allowed to grow so large without that infrastructure being put in from the start. Red-headed stepchild indeed.


The former LOCSD had their chance and lost it by cancelling the only approved, permitted, and funded sewer project. The SRF loan went away, as did the grants appropriated my Ms.Capps.

Then came the lawsuits, enforcement actions and eventual bankruptcy.

A shameful chapter in the history of Los Osos


At least they can’t claim delays due to weather. They should be about 2 months ahead of schedule.


Regardless of the change orders, to threaten to withhold payment on work that WAS DONE!!??

I am getting sick and tired of ALL politicians regardless of affiliation. Yea screw a private business while the Government asshole will still get his paycheck???

Let’s finish this project so we can flush all the Government knuckleheads down it!!!!!


That’s what happens when greedy cheap snobs take over the cities and the county. Everyone seems to go along and through a fashion show… They seem to no nothing about contracts, RFIs and change orders. That’s how construction works. LO will be without a sewer and North County without water. But maybe they should oppress the homeless some more… Corruption and World Net Daily seems to rein.


Low ball the job, then hit them with changes. That’s dishonest contracting 101……..


How do you low ball unknown Indian artifacts and planning for it??


Lonnie Curtis is a joke….horrific watching that clown try and act important on tv….same with kirsten barneich….soccer mom out to show off at cocktail parties….lmfao


Who is Lonnie Curtis in relation to this article?


Wow, what a surprise and Pavlo gave them a pay increase last year that was not accounted for in the contract which was a flat fee. Another, mismanaged project that will cost taxpayers millions. Remember how much the Naci-pipeline ran over budget and the wrongful death suits that followed due to incompetent management. That’s right per this site Pavlo has a mistress, so does he spend more time with her than work? What a joke, or is the joke on all of us – get out your check books people. Maybe Lonnie Curtis from OCSD will take over – can’t be any worse.


Any now the County under Mr. Pavlo’s leadership, with the direction of Chairman Gibson, wants to take over and manage the Paso Robles water basin for the wine cronies in the North County. Their track records is zero and they want more control!


That’s not all. Pavo and his creepy pal Gibson want Morro Bay and Cayucos to partner with them to build a regional WWTP at the CMC site. Great idea, given how thoroughly the County has mismanaged the Los Osos project. Let’s let them financially ruin the residents of two more communities.

Morro Bay needs to steer clear of those losers and hire people with actual experience bringing in projects on time and on budget. Better yet, hire a contractor who guarantees the final cost and schedule. Yes, they exist, and can make such guarantees because they actually know what they’re doing. What a concept.