TBO

These appeals involve a $90 million contract (the Prime Contract) to build the South Bay Ocean Outfall Project (the Project), a 3.5-mile tunnel under the Pacific Ocean to discharge treated sewage at sea. The City of San Diego (City) was the Project owner, Traylor Brothers, Inc./Obayashi Corporation, a joint venture (TBO), was the general contractor and Sehulster Tunnels/Pre-Con, a joint venture (Sehulster), was the subcontractor that supplied to TBO the precast concrete ring segments lining the tunnel. The tunnel was built and apparently works flawlessly. However, disputes arose between City, TBO and Sehulster for cost overruns incurred by Sehulster in manufacturing the tunnel ring segments as a result of certain design changes in the Project. Following a jury trial on Sehulster’s complaint for breach of contract and related causes of action against TBO and TBO’s cross-complaint against City for indemnity, the jury awarded Sehulster $2.8 million in damages against TBO and determined that TBO was entitled to 30 percent indemnity from City. The trial court awarded Sehulster $1.6 million in attorney fees against TBO but no attorney fees to TBO against City.

TBO and City…