Litigation
'Nightmare' Project Leads to $10 Million Award to Whiting-Turner
A rendering of the San Francisco hotel project on which Whiting-Turner Contracting Co. terminated its contract and needed almost a decade to recover money owed to it by the developer.
Eight years after quitting a San Francisco hotel project amid a wave of change orders and disagreements, Whiting-Turner Contracting Co. has won $10 million for unpaid work, damages and attorneys fees from the hotel developer.
A turning point in the case, for which a final appeal was decided in June, seems to have been years earlier when a principal of the developer admitted, in a separate lawsuit against the Virgin Hotels chain, to his firm's chaotic inability to finalize the design. That testimony was admitted into the case over Whiting-Turner's breach-of-contract lawsuit and the developer's counterclaims.
Maryland-based Whiting-Turner won $5.4 million, which was upheld by a state appeals court panel in San Francisco in April, and another $4.7 million more for attorneys' fees that was upheld in June. The appeals court judges, however, nixed $619,000 in expert witness fees sought by the contractor.
The developer of the 12-story hotel intended to operate as part of the Virgin Hotels chain, but the completed building, finished by the Austin Co., has since become a Hilton-branded hotel. It is located near the Moscone Center, San Francisco's main convention center.
Whiting-Turner had in 2015 signed a guaranteed maximum price contract of $36 million with a 3% fee. Design work was incomplete and change orders were to be used on a "design-to-budget" basis, according to the contract. Whiting-Turner was on the line for liquidated damages if a completion deadline of May 2017 was missed. With work on the project starting before design was complete, disputes arose over costs.
There were several unsuccessful attempts by the parties to resolve their difference, but in the end Whiting-Turner terminated the contract for cause.
Whiting-Turner's 2018 lawsuit complaint noted a chaotic situation with incomplete designs for the interior room layouts and the owner's complete redesign of the building facade.
In 2023, the case was tried before a referee, rather than a judge or jury—a method allowed under California civil procedure for complex, time-consuming cases. In its decision for Whiting-Turner, the referee noted incomplete mechanical, electrical and plumbing systems.
The developer had other legal disputes related to the project.
The appeals court judges wrote that the developer's principal, Ganendra Singh, had testified in a separate lawsuit against Virgin Hotels, "that all delays to the project were caused by continuous design changes made by Virgin," triggering a "'nightmare that continued well after" the original project completion date in 2017.
That may have helped convince the referee of who bore the blame in Whiting-Turner's lawsuit—with Singh, who in trying to win damages against Virgin Hotels amplified the contactor's claims against him and his development company.
In that lawsuit, Singh sought to blame the trouble on Whiting-Turner.
"Among other things, the appellate court’s decision highlights one danger of fighting on two fronts: taking inconsistent positions," wrote John Mark Goodman, an attorney with the Bradley law firm, in an article in May after the appeals court decision on the basic verdict.
Goodman wrote that the testimony provided a "key piece of evidence that Whiting-Turner successfully used against the owner."
