Construction manager Mortenson has filed a lawsuit seeking $1.3 million for preconstruction services for an aborted new Sacramento soccer station.
There is one big problem, however. California private equity billionaire Ronald Burkle’s company never signed a contract with the builder, nor with stadium designer HTMB, for what was to be one of the key components of the city’s Railyards redevelopment project.
The planning work, including regular meetings continued from 2018 to March this year — when Burkle’s company Yucaipa Cos. called off the project because of COVID-19.
Mortenson claims it never intended its services to be speculative. Its lawsuit states that leaders of Burkle’s firm repeatedly brushed off the construction manager’s requests to execute a contract as “mere formalities,” and failed to pay submitted invoices while assuring the firm that the project would go forward, ENR has reported.
Although verbal contracts can be binding, they are challenging to enforce, unless the contractor can prove with independent witnesses that there is an offer, its acceptance and an exchange of consideration.
Donald Oder, a San Diego-based attorney, has written that a verbal agreement can’t be enforced in California if it is vague, the terms are misunderstood by one party or the other, or provisions are not to be performed for a year after agreement has been made.
Oder wrote that “the most effective method of proving an oral contract is via the presentation of a neutral witness to the agreement who can attest to its existence and confirm its details.”
The Mortenson lawsuit asserts there were other parties at many of the meetings conducted to plan the stadium design and construction, including ICON Venue Group, the developer’s representative, and HNTB, the architect of record.
Mortenson says in its lawsuit that after after being formally designated as construction manager in late 2019 and beginning in 2020, company staff met with ICON, HNTB and other stakeholders in weekly progress meetings.
“Monthly meetings for project principals also took place. Mortenson began submitting invoices for pay applications for its work in June. The first, submitted in June for $601,000, covered Mortenson’s work on the project going back to January 2020,” ENR reported.
Mortenson claimed its staff “would ask when the Construction Agreement was going to be finalized, and Yucaipa, or ICON on behalf of Yucaipa, stated repeatedly that the agreements were “mere formalities and that the project was moving forward.”
The only thing holding it up was Yucaipa’s negotiation with Major League Soccer over the franchise fee, Mortenson claims it was told. The firm adds that at no time did Yucaipa tell Mortenson that it might not be compensated.