Litigation Ends With Kajima Agreeing Not To Bid on Port Work

By DAVID GREENBERG

Staff Reporter

Kajima Engineering and Construction Corp. has agreed not to bid on any Port of Los Angeles projects for five years and forfeit $7 million the city was withholding for late completion of a $42.2 million port bridge, according to documents filed with the Los Angeles Superior Court.

The out-of-court settlement, reached earlier this month, ended a four-year legal dispute that included allegations of fraud, embezzlement and racketeering against the Monterey firm, which was hired to replace the Badger Avenue Bridge that connects Terminal Island with Wilmington.

Kajima, a unit of Tokyo-based Kajima Corp., sought $35 million in a 1999 lawsuit filed against the city, alleging breach of contract. The city countersued, seeking up to $105 million in penalties. Kajima missed the deadline on the 210-foot long bridge by 230 days, according to the complaint. Construction was scheduled to start in May 1995 and finish two years later.

In the end, Kajima settled for $1 million of the $8 million payment the city had held back due to late completion.

“We had a very strong case against Kajima but we decided to settle because of the uncertainty that’s inherent in any type of litigation,” said David McKenna, an assistant city attorney assigned to the Harbor Department. “This was a very favorable settlement for the city because we ultimately paid $35.1 million for a $42.2 million bridge.”

Attorneys John Clark and Timothy Pierce of L.A.-based Thelen Reid & Priest, which represented Kajima, did not return calls.

Kajima’s only other project for the port in the last decade was construction of a $30.7 million wharf at Berth 301, completed in 1997, said Rachel Campbell, a port spokeswoman.

The firm beat out six other contractors in 1995 to replace the bascule rail bridge, originally constructed in the 1920s. Its low bid of $34.7 million was about $4.2 million less than the second lowest bidder, Long Beach-based American Bridge Co.

The final bill came to $42.2 million after the Board of Harbor Commissioners approved changes of $7.5 million during construction.

In addition to work delays and cost overruns, Kajima allegedly violated city ordinances by placing minority firms on its bid proposal, only to give them little or no work after the contract was awarded, the city alleged.

The contractor also allegedly submitted false and inflated invoices.

In the settlement, Kajima did not admit any wrongdoing.