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$93 Million Subway Contract Dispute Rides to Victory

Nossaman represented the Los Angeles County Metropolitan Transportation Authority in a lengthy dispute over the construction management contract for the Metro Red Line subway project, a line that runs from downtown Los Angeles through Hollywood and into the San Fernando Valley. The contract at issue involved $365 million in billings for management of the $4 billion project.

The lawsuit was originally filed by defendants' former finance manager on the project Martin Gerlinger. The suit alleged that defendant Parsons-Dillingham, a joint venture of engineering and construction firms, had improperly charged the MTA various categories of expenses. The MTA intervened in the suit and filed its own complaint for breach of contract alleging overbilling of overhead and general and administrative expenses. Ultimately the Court was persuaded that defendants improperly billed expenses for the support of employees who were stationed in offices where the MTA paid directly for all support.

The procedurally difficult litigation included a multi-phased bench trial as well as two writ proceedings in the Court of Appeal. Significant rulings in 2004 and 2009 dismissed defendants' crossclaims against the MTA and ruled in the MTA's favor on contract interpretation. In 2013, MTA brought a motion for judgment and the Court issued a ruling awarding the MTA $29 million. After further briefing, the Court more than tripled the award and on February 13, 2014 entered judgment in MTA's favor in the amount of $93.2 million.

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