Management of California contractor C.C. Myers Inc. has been ordered to appear in Sacramento County Superior Court in October after two lawsuits were filed against the company last week for breach of contract for not paying subcontractors on projects in Contra Costa and Sonoma counties.
On April 1, Lathrop-based Con-Fab Corp. filed breach of contract, enforcement of payment bond and enforcement of stop notice release bond against the joint-venture partners of Rancho Cordova-based C.C. Myers and Marin County-based Ghilotti Brothers Inc. for not making a final $500,000 payment on a $2-million subcontract for precast, prestressed concrete supports for bridge reconstruction in Petaluma—due on Dec. 18, even though Caltrans made a progress payment on Dec. 11.
On April 4, Oakland-based Bay Cities Paving and Grading Inc. filed its own complaint for breach of contract, enforcement of stop payment notice and breach of fiduciary duties, naming the officers of C.C. Myers and California Dept. of Transportation for $900,000 owed on highway work in Contra Costa County. C.C. Myers was the prime contractor on that project.
The suit alleges that management of C.C. Myers directed the unlawful diversion of payments received by the general contractor for Bay Cities’ work on State Highway in Contra Costa when “C.C. Myers was actually insolvent under any accepted definition.”
The lawsuit also points out that diversion of progress payments on a construction project is a chargeable criminal offense.
Bay Cities has taken the lead in December on what was a joint venture with C.C. Myers for completing the $133 million Interstate 80 overpass improvement project, known as Across the Top.
That project is still on schedule, according to Dennis Keaton, Caltrans spokesman. “We understand that C.C. Myers is in the process of finding a resolution to its financial problems, and bankruptcy is one option,” he said on April 7. He said that, at this point, payments are going to Bay Cities.
Russell J. Austin, partner at the Murphy Austin law firm and C.C. Myers’ attorney, said that, as of April 8, C.C. Myers had not been served with any lawsuit and could not comment. No one answered ENR’s repeated calls to the contractor’s offices.
“It is infuriating that they are saying they haven’t seen the lawsuit when we sent it in draft and before we filed, asking to see the bank records to find out where the millions [of dollars] in payments they have received from the state on four jobs have gone,” said John Gladych, attorney for Bay Cities.
“These two lawsuits are the tip of the iceberg,” Gladych said, adding that he plans to file additional suits in the coming weeks. On behalf of Bay Cities, he intends to file to release records connected to the joint-venture projects. “This is a large company, and there will be a lot to uncover,” he added.
Bay Cities is moving ahead, paying for the projects out of its own pocket. Three jobs, including the Contra Costa project, are almost complete, but the big I-80 project is ongoing.
A Reputation at Stake
Started in 1977, C.C. Myers became an employee-owned company in 2008, when the owner initiated bankruptcy-protection proceedings for the company bearing his name.
ENR honored Myers in 2008 as a Newsmaker. His firm earned a $5-million bonus for repairing in 18 days a 165-ft-long segment of Interstate 580 in Emeryville that melted after a tanker-truck accident (ENR 6/4/07 p. 12). Caltrans officials had budgeted 50 days for the repair.
In 2010, the roadbuilder started Myers & Sons, Sacramento, and currently is working on the Riverfront Reconnection project.
“If C.C. Myers were still leading this company, we wouldn’t be in this mess,” Gladych said. “He would have made sure people got paid.”