With 35 years of experience retrofitting buildings, the principals of L.A. construction firm Accent Builders Inc. didn’t think twice before bidding on Los Angeles County’s $20.5 million plan to transform a century-old downtown building into a Mexican-American cultural center.

As with many complicated projects, a slew of unforeseen hurdles stalled the completion of La Plaza de Cultura y Artes, but Accent’s biggest problem came after construction was completed in 2011.

The county balked at paying additional costs, among them charges for constructing a foundation to stabilize the historic structure, sticking Accent with $5 million worth of unpaid bills and, eventually, no option but to shut down.

The trouble started soon after construction began, when Accent discovered the building didn’t have a foundation, making it unstable for further work. Tony Federico, who co-owns Accent with his wife and son, said the county insisted the company push forward. So his crews constructed a new base for the building, which tacked on about $5 million to the final cost.

He said the county refused to cover that additional expense, leaving Accent unable to pay its subcontractors near the end of the project.

Eventually, Federico had to use his own money to pay the workers after several contractors took Accent to court. While those debts were paid, he said many relationships have soured due to the delays.

“We had some bad vibes from the subcontractors,” he said. “They said, ‘We’ll bid the next job but we’ll charge higher prices.’ To make a long story short, it just hurt.”

Meanwhile, Federico took his own claim against the county to court. In September, a county Superior Court judge awarded Accent $5.7 million for unpaid costs and attorney fees. The county, however, is appealing that judgment.

Andrew Raines, a transactional real estate lawyer in Beverly Hills, said it’s very common for projects such as La Plaza to run into unforeseen conditions, but it’s rare for a dispute to go to trial.

“Hypothetically, when something happens and you find there’s no proper foundation in place, the first thing you say is, ‘We need to meet now and we need to stop now,’ ” said Raines, who’s not involved in the La Plaza project or the pending legal matter.

“The legal term for this one is ‘one big mess.’ It’s too bad, because it’s probably a great and important project for the county to have done,” he said.

Rough start

La Plaza, which offers exhibits and educational programs on the history of Mexican-Americans in Los Angeles, has been plagued by problems since its inception.

Former county Supervisor Gloria Molina spent years to get the project off the ground. A site was located in an old, long-vacant, five-story building near historic Olvera Street north of downtown Los Angeles, the site of L.A.’s earliest western settlements.

After she finally secured the space, troubles mounted when construction began. At one point, near the end of construction, crews discovered the remains of more than 100 early L.A. settlers, which caused tension in the community. Work was delayed as landscaping crews had to halt when a team of archeologists took over the area to investigate the significance of the remains.

After La Plaza finally opened in 2011, it ran into hefty financial troubles. Within six months, the museum cut its staff in half as fundraising efforts and early visitor counts were lackluster. The initial performance raised concerns over the museum’s ability to sustain public interest and remain viable.

“There were certainly some growing pains that the organization went through,” said La Plaza Chief Executive John Echeveste, who was hired in September. “I think probably some of their expectations, such as membership and store sales, were higher than what they turned out to be. But I think we’ve significantly turned a corner since then.”

The county provides the museum with about $2.5 million a year, Echeveste said, and it still owns the building. He added that La Plaza is not a party in the ongoing dispute with Accent and the outcome in court will have no impact on operations.

But for Accent, the dispute has led to financial ruin, said John Logan Hunter, a Pasadena attorney representing the company.

“Needless to say, it has substantially strained Accent Builders to the point where it has essentially been put out of business,” Hunter said.

Richard Greenberg, who’s providing outside counsel to the county, declined comment, citing the pending litigation.

However, the county said in court filings last year that it was not responsible for paying the extra costs associated with the building’s lack of foundation.

“The question is whether (Accent) has been late in completing the work of construction, and if so, whether and to what extent the county has incurred compensable damage,” the county wrote in its closing argument. “The fact that the plans and specifications did not accurately portray the foundation, or other elements, is not of itself a breach.”  

The county sought more than $500,000 from Accent, claiming the company was liable for the project’s delays.

Moving forward

Federico was the financial backer of Accent, which was primarily run by his wife Ladene; son Ron; and John P. Chappell, who had served as chief executive since 1998. The company focused primarily on rehab construction projects of existing buildings, Federico’s specialty.

He first got into the business in 1966 working for Superior Gunite Co., a concrete subcontractor that he bought a decade later. One of the biggest projects he worked on was the rehabilitation of Los Angeles City Hall in 1994 after the Northridge Earthquake.

While the county is appealing the Superior Court ruling, Federico and his company have been unable to collect any money. Ron Federico has since started working for another contractor while Ladene Federico has given up the construction business altogether.

“My wife said enough of this legal stuff,” he said. “It’s driving us nuts.”

Meanwhile, Tony Federico, 78, is working for Superior Gunite, which he sold to Tutor Perini Corp. in 2011.

Still, he is confident a payday from the county is imminent, a confidence bolstered in September when Judge Robert H. O’Brien agreed that the county is to blame for the additional expenses incurred on the La Plaza project.

“The extra shoring and additional manpower required to support the building to continue framing work was necessary and required to alleviate the consequences of proceeding with the lack of a foundation and added both cost and time to the project,” O’Brien wrote in his decision. “This occurred due only to the county’s instruction that the project had to move forward without a proper foundation. This fateful decision resulted in the classic adage, ‘haste makes waste.’”

The arguments in appeals court are scheduled to begin at the end of August, the county’s deadline to file its initial brief.

Meantime, the original $5.7 million judgment issued in Superior Court is accruing more than $30,000 a month in additional interest at taxpayers’ expense, said Hunter, Accent’s attorney.

“I don’t think they spared too many expenses in an attempt to defeat this case,” he said. “It doesn’t make any business sense at all.”