County Sues Turner Construction over VMC Delays, Safety Issues

Santa Clara County has sued the lead contractor hired to expand Valley Medical Center. The lawsuit filed Thursday accuses Turner Construction of falling behind schedule and driving the $380 million project over budget.

Contractors, however, have blamed the county for the delays.

“The county’s actions guaranty that the medical center will not be completed as expeditiously or economically as Turner proposed,” Turner spokesman Chris McFadden said in a press release sent out Thursday afternoon. “Instead, the county chose to resolve the parties’ disputes in the court of public opinion and the California Superior Court of Santa Clara County. Turner is confident that when the true facts are brought to light, it will be vindicated and the County will be obligated to pay Turner tens of millions of dollars more for the county’s breaches over the course of the job.”

This legal challenge marks the latest volley in a fight between the county and Turner, made public earlier this month when the county released footage of a steam explosion to highlight safety lapses on the work site.

The breach-of-contract lawsuit seeks damages from the contractor for “failure to deliver” a completed hospital bed building on the Valley Med campus. County officials have also issued a termination letter that charges Turner with lagging on the project by not submitting a plan of action to complete it in a timely manner at a reasonable cost.

“Turner has not increased the number of workers on the project despite the availability of enough work to more than double the crew sizes,” Ken Rado, the county’s Fleet and Facilities Department chief, wrote in a letter to Turner. “It has offered no plans to increase production and finish the project faster. Based on Turner’s lack of response and lack of action while in default, the county has reasonably concluded that Turner plans no changes, and that Turner will continue to stall and understaff the bed building project and complete the project years behind schedule.”

Now, it’s up to the county to find a new company to finish the remaining 10 percent of the project, which broke ground in 2009. The under-construction tower will include a burn unit, maternity ward, physical rehabilitation center and other patient services.

Voters authorized the county in 2008 to borrow $840 million to pay for the hospital’s earthquake retrofit and other upgrades. The seismic safety project included a new 168-bed inpatient building, energy plant and underground utility loop.

Turner Construction began working on the expansion in 2009 under a design-build contract. But, according to the county’s complaint, almost from the get-go, change orders tacked on hundreds of days of delays, according to the lawsuit.

Over the following six years, the county and Turner have gone back and forth about work quality, building codes, safety issues and schedule.

Last Friday, the county locked contractors out of the work site.

“Now, the county has terminated Turner and filed suit against Turner and all of its subcontractors ensuring that the project will drag on interminably and at extraordinary additional expense,” McFadden said in a statement.

Below is the press release from Turner Construction.

SANTA CLARA COUNTY DELAYS COMPLETION OF VALLEY MEDICAL CENTER PROJECT

With construction 90% complete, County summarily rejects fair and reasonable proposals to complete medical center project, locks out workers, terminates Turner’s right to complete the Project, and files suit against Turner and more than 125 “John Doe” subcontractors.

(SAN JOSE, CA September 17, 2015) – This past Friday, Santa Clara County officials summarily locked out the contractors working on the Medical Center which will further delay the completion of the project. Their action also prevents hundreds of workers from having access to their tools and equipment and prevents them from working on this or other projects. Turner immediately advised the County that its wrongful actions excused Turner’s further performance on the Medical Center. Now, the County has terminated Turner and filed suit against Turner and all of its subcontractors ensuring that the project will drag on interminably and at extraordinary additional expense.

Over the past weeks, Turner presented the County with several comprehensive proposals to complete the Medical Center. In the face of the County’s action to stop construction, Turner reached out and once again presented yet another plan to ensure a swift and safe completion of the Medical Center.

Michael Kuntz, executive vice president of Turner said, “Our efforts and dedication to the completion of this project have not wavered since our first day on this project. We stand by the aggressive plan presented to the County to complete the project for the least cost and at the earliest possible date for the people of Santa Clara.” Kuntz continued, “With the project 90% complete, the County has once again refused to work as cooperatively, competently and diligently as our staff and our subcontractors.”

Santa Clara County has acknowledged its responsibility for more than three years of delay and has extended the Medical Center’s construction schedule by 1,117 days to address County-caused problems. The County has also been notified of an additional 429 days of delay resulting from design deficiencies, incomplete drawings and the sluggishness of their decision-making process. Six years after construction began, the County and its design professionals still had not resolved problems in their drawings and specifications, or made necessary Owner selections to allow the contractor to complete the work.

Evidence of the County’s failure to provide timely and adequate direction is abundant. For example, suspending work in the pharmacy as the County made changes to the design led to a 754 day delay to work in the pharmacy; and suspending work in the administration area as they considered making changes led to 428 days of delay of that work. In addition, the decision-making process with regard to tiles and the hanging of paper towel holders and soap dispensers in patient bathrooms caused two years of delays in virtually every patient room. The failure on the part of the County to provide timely and adequate direction for work as basic as tile design has directly resulted in significant impacts and changes to more substantial and involved scopes of work including framing, backing, sink specifications, and tile in 168 patient bathrooms.

The County’s actions guaranty that the Medical Center will not be completed as expeditiously or economically as Turner proposed. Instead, the County chose to resolve the parties’ disputes in the court of public opinion and the California Superior Court of Santa Clara County. Turner is confident that when the true facts are brought to light, it will be vindicated and the County will be obligated to pay Turner tens of millions of dollars more for the County’s breaches over the course of the job.

Jennifer Wadsworth is the news editor for San Jose Inside and Metro Silicon Valley. Email tips to [email protected]. Follow her on Twitter at @jennwadsworth. Or, click here to sign up for text updates about what she’s working on.

6 Comments

  1. Is this correct? Work started in 2009 as a Design Build contract? This is a major turd in the punchbowl – no this is a whole herd of turd in the punchbowl. Who at the county ever, ever approved a design build for a project of this magnitude?

    this means that some govt official(s) gave the go ahead to a private contractor and said “start building and we’ll make it up as we go along. We have an endless amount of money to burn.” there are so many ways for this to run off the tracks it makes the head spin. Seriously if this were not Santa Clara Dumbass County – but somewhere else with a teaspoon of common sense – the next thing built would be a wall and some officials stood up blind folded in front of it.

    a $300mm design build contract. Is this a misprint? Seriously !!!!!! Unf*cking believable. How did this ever get approved? I hope for their sake who ever approved this has passed on to their just rewards or has left the country and is living under an assumed name.

    • According to the lawsuit:

      15. Under the Contract, Document 011100, “Summary of Work”, Turner agreed to provide the following General Responsibilities on the Project: The Design-Build Contractor (DBC) shall provide design, design/assist, pre-construction, and construction services for this project. The work includes furnishing all labor, materials, equipment, and tools necessary to complete the project as delineated in the contract documents. Trade contractors will contract directly to the DBC.

      Thanks for reading,

      JK

    • The county must have took lessons from the City of San Jose on “how to absolutely screw yourself”. Unbelievable.

  2. Jenn: Thank you for posting a link to the complaint. Please post a link to Turner’s cross-complaint after it has been filed. At this point, only four things are certain—(1) if everyone sticks to their respective positions, the project won’t be completed any time soon; (2) County Counsel recognizes they have no lawyers on staff with sufficient skill and confidence to prosecute this lawsuit, so they have hired experienced outside counsel who probably charge a significant hourly rate; (3) the lawyers for each side (or sides if Turner cross-complains against anyone other than the County and BCS) are going to make a lot of money; and (4) the County may be the named plaintiff, but the taxpayers will be responsible for the hefty legal bill from the private counsel it has hired and will get the shaft no matter which side prevails. WOW, here’s an interesting factoid—according to the State Bar website, Eric. J. Firstman, lead outside counsel for the County, was admitted to the State Bar 12/12/1983. However, he was suspended from law practice from 9/29/1986 until 9/23/1987 for failure to pay bar dues. Times must have been tough, since bar dues were only a few hundred dollars per year back then. However, Mr. Firstman seems to have made a remarkable recovery. His bio on the Meyers Nave website claims he is among the top .5% of trial lawyers in America. That sounds like at least $750.00 per hour, and perhaps $1,000.00 per hour we taxpayers will be saddled with. Earth to County Counsel—mediate this case to resolution before the extensive discovery, motions, and witnesses noted in the Civil Case Cover Sheet cost the taxpayers attorneys’ fees and costs well into seven figures.

  3. Meyers Nave?! Reed’s trusted firm that led San Jose down the disastrous Measure B path. Now they are in with the County?