On the same day California State Teachers’ Retirement System took formal possession of its headquarters expansion in West Sacramento, the public pension fund filed a civil suit against the contractor for the project.
The suit, filed in Sacramento County Superior Court on Monday against general contract DPR Construction, Inc., several subcontractors, and surety company Liberty Mutual Insurance Co., alleges the defendants committed fraud, breach of contract, civil conspiracy and other accusations for a project that still isn’t completely finished.
“As contractor fell further and further behind in progressing its work toward, and then grossly missed, the project’s contractual completion date, CalSTRS invoked its contractual rights to ‘require the Contractor to submit a recovery schedule demonstrating its program and proposed plan to make up a lag in scheduled progress and to ensure completion of the Work within the Contract Time’ and to ‘require the Contractor to take [remedial action] without additional cost to CalSTRS to make up the lag in scheduled progress,'” the suit states. “Contractor failed and refused to abide.”
Representatives of DPR Construction declined to comment on active litigation. Messages left with media representatives for Liberty Mutual weren’t immediately returned Monday.
According to the suit, CalSTRS signed a contract with DPR in February 2018 to expand its headquarters by 260,000 square feet of office space and 250,000 square feet of new parking. In November 2018, CalSTRS’ board pegged the total project cost as not to exceed $300 million, with a bond for about $248 million to cover the cost issued around that time.
For DPR, the guaranteed maximum price it would receive under the contract was about $265 million, according to the suit.
DPR Construction’s contract called for the project to be completed by March 28, 2023, with no extension unless CalSTRS issued a change order allowing it, the suit states.
If the deadline wasn’t met, DPR would pay $2,500 to CalSTRS for every day the project wasn’t complete, the suit states. Neither DPR Construction nor Liberty Mutual, the surety company that issued the original bond, have made any payments under that provision, according to the suit.
The suit also contends DPR Construction temporarily lost its contractor’s license when a sister company based in the Bay Area, whose license DPR operated under, was acquired by another company and was no longer affiliated with DPR Construction as of Jan. 1, 2021.
Later that year, a “qualifying individual” for DPR Construction to have active state licenses for such work as engineering, building and concrete was no longer associated with the company, the suit states. DPR was an unlicensed contractor on the project beginning in November 2021, and Liberty Mutual Insurance Co. canceled its bond with the company over the unlicensed status in early 2022, the suit states.
According to the suit, DPR has since allowed other required licenses to lapse, as well as stopped paying worker’s compensation insurance.
When CalSTRS performed an audit in December 2023, DPR vehicles displayed a contractor’s license issued to another company in 1983 that expired in 1989, the suit states. The license the company provided was the one under the name of the sister company, DPR Construction of Redwood City, that had since ceased to exist, and the license expired in 2022, the suit states.
Four subcontractors under DPR also lacked valid state contractor’s licenses when they worked on the project, the suit states.
Other accusations in the complaint include fraud by DPR in documenting project progress and costs in payment requests on multiple occasions, up to as recently as June 30 of this year, as well as in change orders.
DPR Construction informed CalSTRS on May 31, 2024, that it would be unable to complete the project, according to the suit. The expansion was formally turned over to CalSTRS July 1, though unspecified work remains to be completed, according to CalSTRS.
CalSTRS seeks $263 million from the defendants under the contracts, as well as at least $1.14 million in additional damages.
“DPR Construction’s inability to properly and competently manage this project needlessly deprived the teachers’ retirement fund of this much needed resource for well more than a year,” CalSTRS General Counsel Brian Bartow said in an email accompanying an announcement of the suit. “Our goal is to ensure the fund is not further impacted by the contractors’ failure to perform and is properly compensated for the delays suffered.”
