Firm Prevails on Material Breach of Contract and Improper Termination Claims 

In a 195-page Final Award, a three-person Arbitration Panel recently awarded A.F. Construction Company, Inc. and its surety, Fireman's Fund Insurance Company, $52.7 million while rejecting virtually all of Clark County, Nevada's $60 million counterclaim. Watt, Tieder, Hoffar & Fitzgerald (WTHF) represented A.F. Construction and Fireman's Fund in the arbitration. The award resolved disputes related to the construction of the Clark County Regional Justice Center in Las Vegas, Nevada.

The contract for the 18-story, 700,000 square foot Justice Center was originally awarded to A.F. Construction in 1999 with a contemplated two-year construction duration. The project was completed nearly four years late and after Clark County improperly terminated A.F. Construction for default.

During a 10-week Arbitration Hearing in Spring 2008, the County claimed nearly $60 million in delay damages, defective work claims, and excess completion costs. In denying the County's substantial claim for damages, the Panel accepted WTHF's arguments that the County materially breached the contract by failing to pay A.F. Construction for over two years through its punitive administration of the contract. As noted by the Panel, Clark County's punitive conduct included improper offsets for allegedly defective work, over-inspection of A.F. Construction's work, and the County's unjustified and untimely assessment of liquidated damages. These material breaches - coupled with the County's waiver of the original contract completion date and the right to claim liquidated damages - supported the Panel's ruling that the County was responsible for the design defects on the project and not entitled to compensation for a single day of its claimed 1,303 days of project delay. Instead, the Panel awarded A.F. Construction and Fireman's Fund substantial delay damages resulting from schedule impacts caused by defects in the project design and untimely resolution of these design defects. Notably, in addition to the affirmative recovery, the Panel overturned the County's default termination of A.F. Construction, thereby vindicating a contractor who had endured years of relentless media attacks by the County.

The trial team, led by Mark Sgarlata and Joe Guarino, was strategically supported from inception by Bob Watt. The team also included Rick Mann, Mike Suga, Chris Burke, Greg Gledhill, and Rebecca Weeks and was supported by the firm's Las Vegas office.