Attorneys

Highlights

  • Cummins & White, LLP successfully represented KDC, Inc. in arbitration for breach of contract, receiving an award of more than $1.13 million (the full amount owed), plus costs and interest.
  • When the award could not be collected due to bankruptcy, Cummins & White moved to foreclose on a mechanic’s lien. A settlement was negotiated, and KDC received more than $1 million (90 percent of the original arbitration award).
  • In-depth preparation by Cummins & White allowed counsel to refute claims of credit owed, including fraudulent billing and costs to repair faulty work done by KDC.

Case Study

In February 2007, Cummins & White, LLP successfully represented KDC, Inc., an electrical contractor, in an arbitration involving Matt Construction and Century City Doctors Hospital for nonpayment of invoices, securing an award totaling more than $1.13 million, plus costs and interest. Unfortunately, Century City Doctors Hospital filed for Chapter 7 bankruptcy, which prevented collection of the award. However, because a mechanic’s lien had been recorded against the property, the landowner, Century City Medical Plaza, was forced to pay KDC more than $1 million.

Background

In 2004 and 2005, KDC, Inc., a wholly-owned subsidiary of EMCOR Group, worked as the electrical subcontractor on a renovation project at a vacant hospital in Century City, CA. Doing business as Dynalectric, KDC completed its work as part of an original subcontract with Matt Construction, the general contractor, and subsequent numerous construction change directives issued by Century City Doctors Hospital (CCDH). When done, the value of the work totaled almost $2.6 million. KDC received monthly progress payments through March 2005, but did not receive any payment thereafter. When the job was finished in July 2005, KDC was owed more than $1.13 million.

Legal Strategy

Cummins & White undertook a two-prong approach to recoup monies for KDC. Shortly after the job was completed by KDC, Cummins & White filed a breach of contract and a mechanic’s lien foreclosure action in Los Angeles County Superior Court. Then, as per a provision in the contract, the breach of contract claim was placed into arbitration. (Foreclosure of the mechanic’s lien was postponed pending completion of arbitration.)

As part of its efforts to win at arbitration, Cummins & White presented compelling evidence and testimony from KDC personnel establishing breach of contract. Counsel showed that:

  • KDC fully performed all work identified in its invoices.
  • KDC charged a reasonable amount for the work it performed (this also was inadvertently supported by a CCDH expert witness).
  • CCDH accepted the work performed by KDC without any complaints or criticisms.

Later criticisms and complaints regarding KDC’s work were without merit (raised more than two years after KDC completed its work on the project). Cummins & White successfully refuted claims by CCDH for credit toward the amount due, including assertions that KDC submitted almost $700,000 in fraudulent billing. A separate contention that CCDH had to pay $136,000 to repair faulty work completed by KDC also was disproved.

Result/Implication

After 14 days of arbitration, Cummins & White was victorious in its representation of KDC when a panel awarded the electrical contractor $1,131,464—the full amount owed for work it performed on behalf of Century City Doctors Hospital. KDC also was awarded interest and its costs, totaling $396,691.

However, shortly after the final award was rendered, CCDH filed for Chapter 7 bankruptcy, eliminating any chance of collecting the award. Cummins & White then resumed foreclosure proceedings on the mechanic’s lien recorded against the property owned by Century City Medical Plaza. A settlement was quickly reached, and KDC received payment of $1,032,032.

According to James Wakefield, lead counsel from Cummins & White, KDC was extremely pleased with Cummins & White’s effort. “Despite signs that Century City Doctors Hospital was having financial troubles, KDC kept its commitment and finished the job without full payment,” Mr. Wakefield said. “The arbitration award was a vote of confidence in KDC’s quality of work and business practices. This also was a financial victory—the subsequent settlement with the property owner allowed us to recover nearly 90 percent of the award amount.”

“Cummins & White did an excellent job for us during arbitration,” said Bill Davenport, chief financial officer for Dynalectric. “Jim Wakefield’s experience as a trial lawyer is evident. He was a better advocate in the arbitration than any of the many lawyers present, and we are very pleased with the financial results.”