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Bank ordered to pay contractor $1.16 million
BREACH OF CONTRACT:
Panel ruled Cal Fed owes firm for failed construction
The largest arbitration association in the county has ruled that California Federal Bank must pay a Thousand Oaks grading contractor $1.16 million for a breach of contract.
The American Arbitration Association in Los Angeles, a three-member panel, ruled in late July that the bank should pay Weber Madgwick , Inc., a small grading and demolition contractor, for a failed 1995 construction project. Neither party received notice of the decision until late last week.
Alexander Robertson IV , the attorney representing the construction company, described the case as a "David and Goliath scenario, " adding that "it was the most egregious abuse of power by a large owner against a small contractor that I*ve ever seen."
Mary Rische, a spokeswoman for Cal Fed, said a lawyer representing Cal Fed "strongly disagrees with the ruling and believes the ruling is contrary to law."
The dispute arose in 1994, when Cal Fed assumed ownership of two Bel Air homes and entered into an agreement with a third owner. The homes were sitting on top of a hill that had been destroyed by heavy rains. The homes were not damaged.The bank hired Weber Madgwick to repair the hill for a lump-sum price. Once work began, Weber Madgwick employees realized that significant additional work would be needed. They asked to increase the lump-sum price, but Cal Fed refused.
Cal Fed then accused Weber Madgwick of abandoning the job and eventually had all of Weber Madgwick bank accounts frozen, nearly putting the company out of business, Robertson said.
During the arbitration, Weber Madgwick attorney produced an internal memo written by a senior vice president of Cal Fed. The memo said Cal Fed had realized the repairs would cost the bank hundreds of thousands of dollars more than it had anticipated.