Kenny/Shea/Traylor/Frontier-Kemper v. City of Los Angeles
This appeal arises out of a multi-million dollar public works project in which defendant and respondent City of Los Angeles Department of Public Works (City) accepted a bid from plaintiff and appellant construction firm Kenny/Shea/Traylor/Frontier-Kemper (Contractor) to serve as prime contractor for the building of an 11-mile sewer tunnel. Although Contractor completed the project on time and under budget, the City withheld $200,000 from the total payment of $257,738,260.52 as a penalty for failing to seek and obtain prior approval for what the parties contract termed the illegal substitution of three of the entities listed on Contractors bid proposal as subcontractors. Contractor sued City, alleging the penalty assessment was in breach of the construction contract and filed a motion for summary adjudication to establish that the contracts penalty provision did not apply to Contractors actions, which was denied. City responded with a summary judgment motion, which the trial court granted, finding no material issues of fact as to the propriety of Citys penalty assessment under the contract terms governing Contractors failure to follow the requirements for subcontractor substitution.
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