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Contracts Keyed to Dawson
Los Angeles Unified School District v. Great American Insurance Co.
Citation:234 P.3d 490.
In 1996, the District contracted with Lewis Jorge Construction Management, Inc. to build an elementary school. In 1999, the District terminated its contract with Lewis Jorge and sought proposals from other contractors to correct defects in Lewis Jorge’s work. The District provided prospective contractors the original plans and a 108-page-long “pre-punch list” listing the defective, incomplete, or missing work it was seeking to have corrected. The District accepted Hayward’s $4.5 million bid and entered into a contract in June 1999. The contract stated that Hayward’s fee would not exceed $4.5 million. Hayward soon discovered the District had greatly underestimated the amount of remedial work and requested additional compensation of $2,847,592. The District paid $1 million with a reservation of rights to take legal action to recover the additional compensation above the $4.5 million. Hayward later learned that the District was in possession of consultant’s reports not disclosed during the bidding process that would have put Hayward on notice of additional latent defects.
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