11.B Correspondence Baker 2020-11-17 AGENDA CORRESPONDENCE
MEETING DATE/ ITEM NO.
DATE REC'D// SUB'D BY
From:Scott Baker<sr-bakerC-juacbell.net>
Sent: Monday, November 16,2020 1:00 PM
To: City Council<citycouncilCa PismoBeach.or >
Cc:Vince Lopez III<vince(Rvlopezirandsons.com>;Butch Lopez<butch@vlopezirandsons.com>
Subject:Agenda Item 11.b. 11-17-2020
External Email
Attached for submission and distribution is a submittal on behalf of V. Lopez Jr. & Sons, Inc. for
consideration with respect to the referenced agenda item.
Please contact me should you have any questions.
Thank you,
Scott Baker
1 SCOTT R. BAKER SBN 87819
Attorney at Law
2 110 S. Mary Avenue, Suite 2-252
3 Nipomo, CA 93444
(805) 704-8373
4 sr-baker@pacbell.net
5 Attorney for V. Lopez Jr. & Sons
6 General Engineering Contractors, Inc.
7
8 Before the Council of the City of Pismo Beach
9
10
11 )
In re:Agenda Item I LB: ) SUBMITTAL ON BEHALF OF V. LOPEZ
12 Declaration of Non-Responsible Bidder: JR. & SONS
13 V. Lopez Jr. & Sons )
November 17, 2020
14 ) 5:30 p.m.
15 )
16 )
17
18
19
20 To the Honorable Mayor and Council Members:
21 City staff, endorsed by the City Manager, is seeking your imprimatur on a resolution
22 that has absolutely no purpose other than to publicly (and wrongfully) disparage the
23 reputation of a long respected, local, service disabled veteran owned business. We urge you
24 to objectively consider the facts contained herein, and reject the proposed resolution.
25 The following is submitted on behalf of V. Lopez Jr. & Sons General Engineering
26 Contractors, Inc. (hereafter"VLS") in response to the City of Pismo Beach("City") staff
27 recommendation to debar VLS from City projects, and the staff report in support of that
28 recommendation. VLS requests that this submission, the exhibits attached hereto, any further
1
Submittal on Behalf of V. Lopez Jr. &Sons
1 documents submitted by or on behalf of VLS, and any recording of the related oral
2 proceedings, be maintained by the City and made part of the administrative record of this
3 matter.
4 1. Introduction -
5 In January, 2018, the City contracted with VLS to act as the general contractor in the
6 construction of a new(replacement) Five Cities Drive Lift Station and the modification of the
7 Spyglass Park Lift Station (the "Project"). The contract had a completion time of 300
8 "working days". According to the City, as set forth in its weekly"Working Day Statements",
9 the Project had a start date of February 2, 2018 and an initial completion date of April 15,
10 2019. Significantly, the designer of the Five Cities Drive Lift Station, Water Systems
11 Consulting, Inc., served as the City's construction manager/inspector for the entirety of the
12 Project.
13 From nearly the outset, the Project was dogged with issues that created delays to the
14 progress of the construction. VLS, and its subcontractors, strongly believe that the primary
15 impediments to efficient and timely construction were design problems and changes, and the
16 City's poor management of the interface between the Project and the City's other contractors
17 and PG&E. The City apparently contends that the delayed completion was due in large part
18 to VLS.
19 It is not unusual for construction projects to suffer from unexpected issues and incur
20 delays in completion. Nor is it unusual for the parties invested in those projects to disagree
21 about the causes and responsibility for delayed completion. What is highly unusual is for a
22 public entity to pursue a course of action as the City is doing here. To be clear, in seeking the
23 debarment of VLS the City is acting illegitimately to deprive VLS of its Constitutionally
24 protected right of liberty, without authority, and in contravention of due process. Further, and
25 most disturbingly, is that VLS offered to privately agree to an outcome that is exactly what
26 Council is being asked by the City to do here, tonight. The City refused this offer, demanding
27 that VLS also pay the City more than $150,000 for unsupported and invalid claims it was
28 making. The City's insistence on proceeding unnecessarily with a public disparagement of
2
Submittal on Behalf of V. Lopez Jr. &Sons
1 VLS can only be viewed as a strong armed tactic to obtain that to which it is not entitled, or as
2 punitive, or both. In any event, the City's purpose in proceeding with this hearing is neither
3 necessary nor legitimate.
4 2. Statement of Facts and Supporting Documents—
5 The following are some of the pertinent facts important in determining this matter,
6 with reference to exhibits attached to this submittal that support those facts. These facts relate
7 both to VLS' contention that the City's present course of action is extralegal and
8 unconstitutional, and to VLS' contention that the staff recommendation is not factually
9 supportable.
10 i) Issues regarding the City's authority for this action.
11 a. Neither State law, nor City ordinance, provides for the prospective
12 debarment of VLS. The Public Contract Code contains provisions related to State Agency
13 debarment procedures; those procedures do not apply to the City(note: debarment by the
14 State Agencies is limited to a time period of six months to three years, here the City is seeking
15 to debar VLS for five years).
16 b. Section 1.04.040 of the City's Code requires all proceedings
17 undertaken pursuant to the City's ordinances be done "with a view to effect their objects and
18 to promote justice." The present proceeding cannot be seen to either effect a legitimate
19 objective nor promote justice.
20 ii) Issues regarding the illegitimacy of the City's action.
21 a. VLS has considerable support that the issues resulting in delayed
22 completion and added cost were caused by others, including the City and its agents. (See,
23 Statements of Vince Lopez III, , and Justin"Spider"Thompson, attached as Exhibits 1, and
24 2,respectively, to this submittal).
25 b. Numerous Requests for Information(RFI's)were submitted by VLS,
26 many of which relate to design issues that needed resolution to allow work to progress to
27 completion. (See, annotated RFI Log, attached as Exhibit 3 to this submittal).
28
3
Submittal on Behalf of V. Lopez Jr. &Sons
1 C. Many of the RFI's resulted in Change Orders (CO's) issued by the
2 City. (See, annotated CO Log, attached as Exhibit 4 to this submittal).
3 d. Significant delay often occurred between the submittal by VLS of
4 RFI's to the City and the City's response, and submittals of Proposed Change Orders (PCO's)
5 by VLS and the issuance of CO's by the City, causing delay to the progress of the Project.
6 (See, Delay Logs, attached as Exhibit 5 to this submittal).
7 e. The City did not grant contract extensions as requested by VLS, nor did
8 the City consider material order lead time, or the delay in City responses to RFI's and PCO's,
9 in calculating the contract completion date. (See, Statement of Vince Lopez III, Exhibit 1,
10 supra).
11 f. The City informed VLS that contract days would not be an issue and
12 that additional days would be added to the contract to account for delays caused by PG&E,
13 ProUsys, and entities other than VLS. (See, Statement of Vince Lopez III, Exhibit 1, supra;
14 and, emails between Vince Lopez III and Chad Stoehr(City of Pismo Beach) dated July 15,
15 2019 regarding additional contract days, attached as Exhibit 6 to this submittal). Additional
16 days were not granted by the City, and the City now contends VLS is liable to the City for
17 delay damages, including liquidated damages, and alleged"actual" damages in excess of
18 $320,000. (See, final Working Day Statement, attached as Exhibit 7 to this submittal, and the
19 staff report and proposed resolution that is part the present Agenda item).
20 g. According to the City the contract completion date approved by the
21 City was March 17, 2020, and the actual completion date was June 22, 2020, a difference of
22 69 working days. (See, staff report, page 1, and final Working Day Statement, Exhibit 7,
23 supra). The City has imposed liquidated damages (LD's) on VLS in the amount of$69,000
24 based upon a contractual LD rate of$1,000 per day (See, staff report,page 1, and proposed
25 resolution). In order to be liable for these LD's VLS would need to be solely responsible for
26 the alleged 69 day delayed completion.
27 h. The City had beneficial occupancy of the Project not later than May 4,
28 2020, and perhaps as early as April 30, 2020, thus rendering the City assigned"actual
4
Submittal on Behalf of V. Lopez Jr. &Sons
1 completion" date, and the concomitant calculation of LD's, suspect. (See, Statement of Vince
2 Lopez III, Exhibit 1, supra).
3 i. VLS has continuously and consistently disputed the City's imposition
4 of LD's and the City's calculation of those LD's. (See, Statement of Vince Lopez III, Exhibit
5 1, supra).
6 j. The City did not respond to multiple efforts by VLS to hold non-
7 litigious discussions to resolve the different positions regarding delay causation and LD's.
8 VLS then submitted a Notice of Claim pursuant to Public Contract Claim section 9204 in an
9 effort to bring the City to the table to attempt an informal resolution of the issue. The only
10 impact of the claim was to deal with the City's imposition of LD's, VLS did not seek
11 affirmative relief from the City for delay damages suffered by VLS for which VLS believes
12 the City to be responsible. (See, VLS Notice of Public Contract Claim, attached as Exhibit 8,
13 to this submittal).
14 k. VLS first heard that the City was pursuing debarment from an email on
15 November 5, 2020 at 4:21 p.m. from the City Clerk, attaching a Notice of Public Hearing for
16 the Council to consider naming VLS a"non-responsible bidder" and disqualifying VLS from
17 future work for the City.
18 1. On November 6, 2020, VLS through counsel, communicated to the
19 City, by way of its counsel, its surprise and displeasure at the City's action, especially in light
20 of the harm this will cause VLS and the many attempts by VLS to engage the City in a
21 process designed to resolve the delay issues. Significantly, in this letter, VLS also expressed
22 a willingness to privately agree to refrain from bidding on City projects if the matter was not
23 set for public agenda. (See, letter from VLS counsel dated November 6, 2020, attached as
24 Exhibit 9 to this submittal).
25 in. Also on November 6, 2020, counsel for the City delivered a response
26 from the City Manager The letter contained several false and unsupportable statements
27 regarding VLS, and specifically stated that the debarment hearing was necessary to protect the
28 City from "suffer[ing] the same consequences on future City projects." The letter did,
5
Submittal on Behalf of V. Lopez Jr. &Sons
1 however, indicate a willingness to discuss the agreement offered by VLS. For the first time,
2 by this letter, VLS was made aware that the City was seeking $322,500 in damages from VLS
3 for delayed Project completion, in addition to the LD's already imposed. However, the City
4 may only recover LD's as set forth in the contract. The attempt by the City to obtain LD's
5 and, in addition, what can be called alleged"actual costs" for delay is not legal, and the
6 contract language upon which the City relies is not only factually inapt but is unenforceable as
7 a matter of California law (See, Public Contract Code §7203(a)). Thus, the most the City
8 could recover, even if it can support LD's against VLS is $69,000. The City Manager
g premised any agreement that could prevent the public hearing on the payment by VLS to the
10 City of half of the illegal amount of$322,500 ($161,250), a release of any claims by VLS
11 against the City, and VLS' agreement to not bid City projects for a period of 25 years. The
12 letter concluded by requiring VLS' acquiescence not later than 5:00 p.m. on November 10,
13 2020, after which, he stated, no changes to the agenda could be made. This letter was
14 received at 3:00 p.m. on Friday,November 6, 2020. (See, email from James Lewis, via City
15 Counsel, to Scott Baker, attached as Exhibit 10 to this submittal.)
16 n. On Monday morning,November 9, 2020 at about 7:30 a.m. VLS,
17 through counsel responded to Mr. Lewis. The letter explained the efforts made by VLS to
18 informally resolve the delay issue, indicated the City's stated objective of preventing VLS
19 from performing City projects could be met, and suggested a"placeholder agreement"be
20 made whereby VLS would agree not to bid City projects or pursue claims against the City
21 while a process was undertaken to attempt to resolve the delay impact issues. "During this
22 effort, I propose that the Notice be revoked, tabled or not issued; that V. Lopez& Sons
23 refrain from any City project bids and also refrain from pursuing any claims against the City;
24 and, that the parties agree to a process to exchange positions, and information, and then
25 engage in good faith dialogue in an attempt to resolve, or at least narrow, the division between
26 them." (See,November 9, 2020 email from Scott Baker to James Lewis, attached as Exhibit
27 11 to this submittal).
28
6
Submittal on Behalf of V. Lopez Jr. &Sons
1 0. At about 4:30 p.m. on November 9, 2020, counsel for VLS received a
2 response from Mr. Lewis that, in essence, said his prior offer on behalf of the City,was non-
3 negotiable. The email further stated, falsely, that VLS and its counsel had"throughout the
4 pendency of the project"taken an"adversarial approach"to the City, and that the public
5 hearing would proceed as scheduled on November 17, 2020. (See, email dated November 9,
6 2020 from James Lewis to Scott Baker, attached as Exhibit 12 to this submittal).
7 P. Forty minutes after receiving the email from Mr. Lewis counsel for
8 VLS responded expressing incredulity regarding the mischaracterizations contained in the
9 email and the unwillingness to explore less damaging options, especially in light of VLS'
10 willingness to voluntarily give the City what Mr. Lewis had stated the City's objective to be
11 in pursuing the subject resolution. The communication also expressed concerns that due
12 process rights were being abridged, and requested support for the claims that the City, through
13 Mr. Lewis, was making. (See, email dated November 9, 2020 at 5:23 p.m. from Scott Baker
14 to James Lewis, attached as Exhibit 13 to this submittal).
15 q. The following day,November 10, 2020, counsel for VLS sent Mr.
16 Lewis a lengthy email which was a detailed response to the false statements made by Mr.
17 Lewis, and another request that the City give in to logic, reason, and fairness and engage in a
18 resolution process rather than a public degradation of VLS. (See, email from Scott Baker to
19 James Lewis dated November 10, 2020, attached as Exhibit 14 to this submittal).
20 r. On November 11, 2020 counsel for the City and counsel for VLS had a
21 telephone discussion regarding the matter. On November 12, 2020, the City Manager emailed
22 counsel for VLS and enclosed a draft of the staff report in support of the present proposed
23 resolution. In that communication, Mr. Lewis indicated that the City would ultimately hold
24 VLS liable for more than $200,000 in construction management costs arising from the
25 delayed completion. The email also reminded counsel of the deadline for acquiescence or the
26 agenda item with its "support"would be published. (See, email dated November 12, 2020
27 from James Lewis to Scott Baker, attached as Exhibit 15 to this submittal).
28
7
Submittal on Behalf of V. Lopez Jr. &Sons
1 S. On the same day,November 12, 2020, counsel for VLS responded to
2 Mr. Lewis questioning the "damage" calculation upon which the City was demanding
3 payment from VLS and pointing out that there was no back up information to justify either
4 the amount or VLS' liability. Further, the communication questioned Mr. Lewis' request for
5 a 25 year debarment of VLS, and also asked the authority for the City's proposed action. The
6 email also wondered how the City was justifying apparently attempting to unilaterally void a
7 change order that it had already approved, and thus had become part of the Project contract
8 with VLS. Most importantly the correspondence asked: "How can the City justify the time
9 and expense of this hearing when VLS has already agreed to not bid City projects, and that is
10 the ONLY outcome that can come from the hearing?" (See, email from Scott Baker to James
11 Lewis dated November 12, 2020, attached as Exhibit 16 to this submittal).
12 t. At 11:46 a.m. on November 12, 2020, VLS discovered that the agenda
13 item notice had already been posted on the City website. Counsel for VLS notified the City
14 of this fact that the "horse was out of the barn" and the harm VLS was attempting to avoid
15 may have already been imposed. The City Manager responded that what had been posted was
16 "only"the "standard notice" and"cannot be pulled until the agenda item is and your client has
17 not made this decision. We have a little less than 3 hours left." (See, email exchange between
18 Scott Baker and James Lewis dated November 12, 2020, attached as Exhibit 17 to this
19 submittal).
20 U. A few minutes later VLS directed its counsel to make a final offer to
21 the City,based purely on the business ramifications of the unwarranted public disclosures and
22 the costs to resolve the dispute. For the purposes of clarity this email is reprinted here and
23 attached as Exhibit 18 to this submittal.
24 "Gentlemen,
25 I just spoke briefly with my client. Given the time constraints imposed by the City I will not
26 address the draft staff report's contents, and instead cut to the chase. Suffice to say, my client
27 and I do not agree with the staff report, and certainly do not agree that the City has been
28 damaged by my client.
8
Submittal on Behalf of V. Lopez Jr. &Sons
1 That being said, my client has authorized me to convey the following non-negotiable offer:
2
3 1. The City may retain $69,000 from the retention moneys currently withheld, and this is not
4 to be considered an admission of any liability or responsibility for the delay in project
5 completion;
6 2. V. Lopez & Sons will not bid on or participate in any City owned project for a period of
7 five years;
8 3. V. Lopez & Sons will not pursue any claims against the City related to this project;
9 4. The Parties will execute an agreement that includes mutual general releases of liability;
10 5. The City will immediately remove any and all references to the proposed Agenda item and
11 will not further post or publish anything related thereto; and,
12 6. The terms of this resolution will be confidential.
13
14 Please note that until last Friday afternoon my client understood only that the City was
15 imposing liquidated damages in the amount of$69,000 against V. Lopez Jr. & Sons, which
16 my client continues to firmly believe is not justified. The manner in which the City has
17 leveraged the public hearing is not well taken, and my client's offer should not be viewed as
18 any admission of liability to the City, but rather is made based solely upon the business
19 ramifications of the City's course of action, and the expense and time impact of protracted
20 litigation.
21
22 Please respond immediately to this offer, as required by the exigent timeframe upon which the
23 City has insisted.
24
25 Thank you,
26
27 Scott Baker"
28
9
Submittal on Behalf of V. Lopez Jr. &Sons
1 Thus, VLS was offering the City not only the only outcome that could come from the
2 public hearing (a de facto debarment for five years),but also a release of all claims, AND
3 $69,000 in liquidated damages that are extremely questionable as to their validity and amount.
4 In essence VLS was, to protect its business reputation from this illegitimate public
5 besmirching, giving the City everything it was possibly entitled to, and likely vastly more
6 based on the infirmity of the City's LD support and the strength of the VLS delay claims
7 against the City.
8 V. Later the same day,November 12, 2020, the City directed its counsel to
9 reject the VLS offer. That communication threatened further action against VLS by the City
10 if VLS did not capitulate. (See, email communications between counsel dated November 12,
11 2020, attached as Exhibit 19 to this submittal).
12 iii) Issues regarding the violation of VLS' due process protections.
13 a. By publicly contending that VLS is "non-responsible" and requesting
14 that VLS be excluded from bidding on City projects, the City has implicated a
15 Constitutionally protected right of liberty held by VLS.
16 b. VLS is entitled to due process, requiring, at a minimum, full disclosure
17 from the City regarding the basis of the proposed action against VLS, including the
18 documentation and other evidence that supports the staff report and recommendation(and
19 proposed resolution) that VLS is "non-responsible" and has directly caused "financial loss to
20 the City" of approximately $322,5000; and provide VLS reasonable opportunity to prepare a
21 response; and,provide VLS an opportunity for a hearing on the matter before an impartial
22 tribunal.
23 C. VLS had dealt with the City on this Project since 2017 and for the first
24 time was informed of the City's plan to debar VLS on November 5, 2020.
25 d. VLS responded to the proposed debarment by requesting the required
26 information. No information was provided until November 9, 2020, and that information did
27 not provide any factual support for the City's resolution that not only includes a determination
28
10
Submittal on Behalf of V. Lopez Jr. &Sons
1 that VLS is "non-responsible"but also that VLS has damaged the City in an"approximate"
2 amount of$322,500.
3 e. Rather than provide any substantiating information the City stated that
4 it intended on moving forward with the public hearing, despite VLS offering to voluntarily
5 refrain from bidding on, or participating in, City projects.
6 f. The City has no ordinance concerning debarment, nor any process for
7 it. The City did not provide any information requested by VLS regarding the City's authority
8 for the present action(See, Exhibit 16, supra).
9 g. The City set unreasonable and unnecessary timeframes for VLS to
10 respond to the serious allegations made against it. While determinations regarding whether a
11 contractor is "non-responsible" are often made in a condensed timeframe that is because they
12 are almost always made in the context of an existent bid dispute, and a hoped for expeditious
13 start of construction. Those exigent circumstances do not exist here. VLS has no bid
14 pending; the proposed City action is not even"ripe" for consideration and there is no valid
15 reason for the City to "rush to judgment".
16 h. The City, without justification, refused to refrain from the public
17 publication and hearing of the disparagement of VLS despite VLS offering to meet or exceed
18 any conceivable outcome the City could achieve (See, Exhibits 18 & 19, supra).
19 i. The City predicated the protection of VLS' Constitutional right to
20 liberty upon VLS paying to the City sums of money which the City was not entitled to and to
21 which the City knew, or should have known, it was not entitled to. Counsel for VLS, by
22 email on November 13, 2020, asked the City Attorney what theory the City relied upon for its
23 position the City could both impose LD's and seek"actual delay damages". No response has
24 been received. Nor has the City responded to VLS' query as to how the City justifies
25 unilaterally modifying the contract to "unwind"two fully executed change orders (See, emails
26 between counsel dated November 13, 2020, attached as Exhibit 20 to this submittal).
27 j. The City did all of these things without providing required information
28 to VLS and in advance of allowing VLS an opportunity to respond and to be heard on these
11
Submittal on Behalf of V. Lopez Jr. &Sons
1 matters. Further, the time frame provided by the City to provide a response is not adequate to
2 allow VLS to accumulate the information and evidence that is warranted to prepare a response
3 to defend against these allegations.
4 iv) Issues regarding lack of factual support for the City's actions.
5 a. The staff report in support of the recommendation to debar VLS
6 consists almost entirely of the unsupported opinions of the staff(presumably Chad Stoehr as
7 he signed off on the report). No documentation is provided to provide any credence to the
8 statements regarding VLS' alleged shortcomings and errors, nor is there any documentation to
9 support the damage claims urged by the City.
10 b. The City's report ignores the many shortcomings in the design which
11 led to multiple change orders, design modifications, and delays.
12 C. VLS incorporates the statements and referenced exhibits set forth in
13 section ii) a. through f., above. Especially telling are the comments found in Doug Terry's
14 response to the staff report which is attached to the Statement of Vince Lopez III (Exhibit 1)
15 and the Statement of Justin"Spider" Thompson (Exhibit 2), which address—and
16 substantially contradict—much of the basis for the staff recommendation as set forth in its
17 report, especially the City's assertion that VLS (and MTI, its subcontractor) did not
18 understand PG&E standards.
19 d. In its report, City staff complains that VLS failed to seek additional
20 contract days when submitting proposed change orders (See, staff report, page 6), and that
21 VLS then asked for an addition of 120 contract days after change orders had already been
22 executed(See, staff report,page 7). City staff asserts this in support of its claim that VLS
23 "demonstrated a lack of understanding of public works process". In fact, VLS had
24 constructed public works projects for 41 years, and certainly"understands the process".
25 Regarding the change orders and additional contract days, VLS was informed by the City
26 early in the Project that contract days would not be an issue (See, Statement of VLS III,
27 Exhibit 1). Later, the City flipped on this statement and began to threaten VLS with the
28 imposition of LD's. That is when VLS submitted its request for 120 additional contract days.
12
Submittal on Behalf of V. Lopez Jr. &Sons
1 This submission by VLS was largely driven by substantial delays associated with PG&E
2 responsiveness and directives. These issues had been discussed with the City and the City
3 had indicated that contract days would be added commensurate with the delay. However, in
4 the resulting change order the City added only 20 contract days. VLS questioned this and the
5 City responded that the necessary days would be reviewed and added once the issues caused
6 by PG&E had finally been resolved(See, Exhibit 6, supra). As stated earlier, despite the
7 City's assurances to the contrary, no further contract days were added.
8 e. In its report City staff represents that it calculated contract days to be
9 added to change orders for extra work by"totaling"the labor hours estimated in the VLS
10 proposed change order and converting that to "working days". Aside from not being an
11 accurate method to estimate working days, the result, as is always the case with days added in
12 change orders, reflects only the actual construction time required and does not account for
13 delays attributable to material acquisition, or significantly here,to the lag time between VLS'
14 submission of the proposed change order and the City's response, thereto (See, Exhibit 5,
15 supra).
16 3. Discussion—
17 i) There is no apparent authority for this action.
18 As demonstrated, above, there is no ordinance or state law that authorizes the City to
19 debar VLS. The staff recommendation is couched in terms of declaring VLS "non-
20 responsible", however that moniker is used in the context of current project bid submittals in
21 conjunction with the mandate to public entities to award projects to the lowest"responsible
22 bidder". Here, the City is using this brand in seeking to disqualify VLS from bidding on City
23 projects for five years. This is the definition of a debarment action. Public entities that
24 engage in debarment actions have processes defined in regulations, laws, and ordinances. For
25 example, debarment proceedings and limitations regarding federal contractors are clearly set
26 forth in the Federal Acquisition Regulations ("FAR's"). Similarly, numerous cities and
27 counties in California have adopted ordinances and regulations setting forth the requirements
28 for such proceedings and detailing the due process safeguards afforded the subject contractor.
13
Submittal on Behalf of V. Lopez Jr. &Sons
1 Here, there is no process defined, no basis for allowing this action, and no defined
2 procedure to ensure VLS' due process rights. As noted, above,when VLS asked the City to
3 advise as to the authority for the present action the City provided no response.
4 ii) This action is unnecessary and not brought for any legitimate
5 purpose.
6 City staff has recommended the Council adopt a resolution that would publicly declare
7 that VLS was responsible for"several significant issues" during the construction of the
8 Project; that VLS caused delay for which the City imposed$69,000 in liquidated damages;
g that VLS caused the City to incur financial loss in the approximate sum of$322,500; and,
10 that VLS is "a non-responsible bidder". The result requested by staff is to "disqualify"VLS
11 from performing work for the City for a period of five years. As stated earlier, the issues
12 between VLS and the City are best described as common construction disputes. These
13 disputes should not be the genesis of disparaging (and untrue) declarations, nor the basis for
14 the debarment of a contractor. In reality, they almost never are.
15 Unfortunately for VLS, the mere publication of these accusations, and suggestion that
16 VLS be debarred, will be debilitating to VLS' business, and the stigma created will impact
17 VLS' reputation for years to come. An actual affirmation by the Council of these
18 unsupportable declarations, and a determination of debarment, will be catastrophic. As
19 longtime Chief Justice of the United States Supreme Court Warren Burger, then Chief Judge
20 of the District of Columbia Circuit, described it: "The impact of debarment on a contractor
21 may be a sudden contraction of bank credit, adverse impact on market price of shares of listed
22 stock, if any, and critical uneasiness of creditors generally, to say nothing of'loss of face' in
23 the business community. These consequences are in addition to the loss of specific profits
24 from the business denied as a result of debarment. We need not resort to a colorful term such
25 as 'stigma' to characterize the consequences of such governmental action, for labels may blur
26 the issues. But we strain no concept of judicial notice to acknowledge these basic facts of
27 economic life." (Gonzalez v. Freeman, (D.C. Cir. 1964), 334 F.2d 570, 574).
28
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Submittal on Behalf of V. Lopez Jr. &Sons
1 Given the substantially adverse impact on VLS, the Council, at a minimum, should
2 ask: "what is the motivation for this request, and what City interest will it serve"? Here, the
3 answer is that no City interest will be better served because of the City's course of action. As
4 to the motivation, VLS is at a loss, and can only surmise this action was undertaken to punish
5 VLS by public disparagement, or to gain leverage in the contract dispute regarding delayed
6 Project completion.
7 a. This action was not necessary for the City to achieve its stated
8 objective.
9 City staff and any other proponents of the proposed resolution will undoubtedly echo
10 the words of the City Manager regarding the propriety and objective of this action: " Let me
11 be clear, however, that we plan to move ahead with the hearing on November 17. The
12 challenges we dealt with and the costs we incurred have caused significant damage to the City
13 and I believe it is incumbent on us to protect the City so it doesn't suffer the same
14 consequences on future City projects." (See, Exhibit 10, supra). The true facts belie that
15 rationale for this hearing. Those facts are that VLS, upon learning of the City's intentions,
16 consistently and repeatedly offered to voluntarily agree not to bid on, or participate in, City
17 projects for a period of five years. VLS immediately offered this to the City, along with a
18 forbearance to assert claims against the City, and an invitation to pursue a course of"non-
19 litigious"resolution of the contract dispute. VLS, because of the potentially catastrophic
20 impact that publication of the agenda item would have, asked the City only to hold off on the
21 hearing, and on publishing the agenda item, and engage in good faith efforts to reach an
22 accord. VLS pointed out that this was reasonable given its acquiescence to the only outcome
23 that the resolution would achieve, an outcome that was the stated"objective" of the City, that
24 being VLS not participating in City projects for five years. Further, given the very tight time
25 constraints imposed by the City, this would allow a fair opportunity for VLS to prepare a
26 response should a resolution of the parties' differences not be accomplished. The City refused
27 the VLS offer, and refused to alter the hearing date.
28
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Submittal on Behalf of V. Lopez Jr. &Sons
I Instead, from the City Manager, the City demanded that VLS,by 5:00 on November
2 10, 2020, agree to an effective disbarment for 25 years, and pay the City $161,250, or the
3 agenda would be published and the hearing would go forward, as planned.
4 Keep in mind, that despite continuous requests from VLS, the City never provided any
5 substantiation for its demand for money in addition to the LD's already imposed. The City
6 was requiring VLS to pay for alleged delay damages to which it was not entitled, and for
7 which it provided no support, or it would proceed with the public defamation of VLS. Until
8 November 6, 2020 VLS was aware only that the City intended to impose LD's in the amount
9 of$69,000. VLS has always objected to this and continues to challenge both VLS' liability
10 for these damages and also the manner in which they were calculated. On November 6, 2020,
11 VLS was advised it had four days to agree to pay the City a vastly greater amount of money,
12 "or else". Can you imagine your City Manager coming to you and urging you to pay
13 hundreds of thousands of dollars without showing you any supporting documentation? VLS
14 was being required by the City to do exactly that or face public humiliation. Not only will
15 there be a stigma to VLS' reputation,but as Chief Justice Burger noted, the economic impact
16 is very real. Bonding, banking, and customer relationships will all be compromised. Future
17 bidding opportunities on public works jobs in the state will be jeopardized. At best, the City's
18 tactics can be considered"strong armed".
19 Ultimately, the specter of this humiliation, and the realization of the horrific impact
20 that would follow this publicity, resulted in VLS reaching a business decision that it must
21 capitulate to the City's improper and unjust demands. Thus, VLS conveyed an offer to the
22 City that it would agree to refrain from City projects for five years, allow the full LD
23 imposition of$69,000 to be taken from retention otherwise payable to VLS, and would
24 execute a release in favor of the City thereby forfeiting what it believes to be valuable claims
25 against the City. VLS knew that the City's demands for delay damages on top of the imposed
26 LD's were not valid(see, section ii)b., below), and knew that the $69,000 in LD's was highly
27 questionable. Yet it wanted this action to terminate, and bit the bullet. Unbelievably, the City
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Submittal on Behalf of V. Lopez Jr. &Sons
1 rejected the offer, which as a result, is "off the table". Again, what are the City's true
2 objectives and motives in proceeding with this action?
3 b. The City's damage claim is illegal and unsupportable.
4 As indicated, VLS was informed for the first time last week that the City was claiming
5 "delay damages" of$322,500, in addition to imposing $69,000 in liquidated damages against
6 VLS. (Note, the staff report quantifies the purported damage as $323,437.75, and the
7 proposed resolution and City Manager state them as "approximately" $322,500. They will be
8 referred to here as $322,500).
9 According to the staff report (at page 8), the City's claim of delay damage includes the
10 following:
11 $188,545 - the total of three separate"Construction Management Amendments". (Because
12 VLS has been provided no documentation of any of the City's claimed damages we are not
13 aware of what this amount actually represents,but will assume that it is likely invoicing from
14 WSC for added Project management and inspection. Similarly, due to a lack of
15 substantiation, VLS does not know whether the City has, in fact paid these sums).
16 $15,395 - "Additional Engineering Services, Amendment#7". (Again, VLS has no
17 understanding of the basis or reasonableness of this amount, whether, and to whom it was
18 paid, and cannot understand how VLS would be responsible for any amount of"engineering
19 services").
20 $22,283 - "CCO #21"
21 $97,214.75 - "CCO#26" (These last two amounts, according to staff explanation(page 9),
22 are apparently the combined value of two change orders—if that value is considered to be the
23 sum of the actual added contract value and the number of added contract days multiplied by
24 the LD factor of$1,000 per day).
25 At the outset, the entire city delay damage claim is legally invalid pursuant to Public
26 Contract Code section 7203,which states: "(a) A public works contract entered into on or
27 after January 1, 2016, that contains a clause that expressly requires a contractor to be
28
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Submittal on Behalf of V. Lopez Jr. &Sons
1 responsible for delay damages is not enforceable unless the delay damages have been
2 liquidated to a set amount and identified in the public works contract."
3 Apparently, in 2015, California's legislature became concerned that public entities
4 were beginning to insert language in construction contracts that, as the City did in this
5 Project's contract(and is trying to assert now against VLS),provide for the recovery by the
6 public entity of both liquidated damages and consequential or"actual"damages for delay in
7 project completion. The legislative history of the Assembly Bill (AB 552) that became
8 codified as Public Contract Code section 7203 is instructive. The Senate Floor Analysis of
g the bill stated: "According to the author's office, this bill is intended to address a troubling
10 trend concerning public works construction contracts. Specifically, the author's office points
11 out that a number of public agencies have begun utilizing contract provisions that call for both
12 liquidated damages and unlimited consequential damages as penalties for project delays in
13 their public works contracts."
14 The language that the City apparently relies upon is found in the contract between
15 VLS and the City, at section 6-13 "Liquidated Damages". Following a recitation of the right
16 to impose LD's in the amount of$1,000 per day for delays that section contains the exact type
17 of language proscribed by Public Contract Code section 7203:
18 "It is further agreed that in case the work called for under the Contract is not finished and
19 completed in all parts and requirements within the time specified, the City Engineer shall have
20 the right to extend the time for completion or not, as may seem best to serve the interest of the
21 City; and if he decides to extend the time limit for the completion of the Contract, he shall
22 further have the right to charge the Contractor, his heirs, assignees, or sureties, and to deduct
23 from final payment for the work, all or any part, as he may deem proper, of the actual costs of
24 engineering, inspection, superintendence, and other overhead expenses which are directly
25 chargeable to the Contract, and which accrue during the period of such extension, except that
26 the cost of final surveys and preparation of the final estimate shall not be included in such
27 charges."
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Submittal on Behalf of V. Lopez Jr. &Sons
I This is precisely the form of"double dipping" contract language that the legislature
2 banned, beginning with contracts made after January 1, 2016,which, of course, includes the
3 present contract. Because this contract language is unenforceable the City's demands for any
4 amount other than specified LD's, ie., $69,000 is unenforceable and void.
5 Even had state law not banned the language relied upon by the City, that section of the
6 contract would not provide support for the City's demand. The City's final "Working Day
7 Statement" indicates the amended contract completion date was March 17, 2020 and the City
8 claims the "actual" completion date was June 22, 2020 resulting in the calculation of the 69
9 days and the imposition of LD's in the amount of$69,000. There is no evidence that the
10 completion date was extended by the City to the date of"actual" completion, so that, if the
11 contract language was viable, the City could attempt to impose actual damages "which accrue
12 during the period of such extension." Therefore, since there was no extension, the City would
13 not be entitled to claim damages allegedly incurred in that timeframe, in any event.
14 Moreover, the City consistently indicated to VLS that contract days would not be an
15 issue. This was verified by the City's statement in July, 2019 that adjustments would be made
16 in light of the delays outside of the control of VLS. (See, Exhibit 6, supra). Although
17 promised, those additional days were never added to the contract completion date. VLS relied
18 upon these representations to the City. Now, the City is attempting to avoid those
19 representations, and it should be estopped from so doing.
20 Further, a significant part of the City's claim of$322,500 in damages is based upon
21 the City's assertion that it"was not obligated"to issue two executed change orders that had
22 added a combined 67 days of contract time to the Project. Apparently staff is attempting to
23 unilaterally unwind these change orders, take back the contract days given, and add those
24 days to the City's liquidated damage claim at$1,000 per day. (See, staff report,pages 8 and
25 9). This vividly demonstrates the overreach the City is willing to undertake. It is universally
26 accepted that once a change order has been executed by the parties it becomes an enforceable
27 part of the original contract. City staff seems to recognize this on page 7 of its report,
28 speaking about VLS' request for additional contract days: "The tactic of going back and
19
Submittal on Behalf of V. Lopez Jr. &Sons
1 seeking additional compensation for fully executed change orders is also inconsistent with the
2 Contract Documents and the Public Contracting (sic) Code." Apparently, the City considers
3 this principle of construction contracting to be a"one way street". Any City declaration,
4 including that contained in the proposed resolution, to the effect that VLS owes the City
5 money based on the City's unilateral revocation of fully executed change orders constitutes an
6 obvious and willful breach of contract.
7 The bottom line is that the City is not entitled to anything more than the liquidated
8 damages it has already imposed, and then only if it can demonstrate that the 69 extra days to
9 complete the Project were solely chargeable to VLS. The inescapable fact is that the VLS
10 offer to voluntarily relinquish the full amount of LD's imposed, in conjunction with the self
11 imposed abstention from City projects and other terms offered, was absolutely the very best
12 result the City could achieve in total resolution of these disputes. Acceptance by the City
13 would have avoided the present hearing, concluded the contract dispute, and obviated the
14 need for time consuming and costly litigation to reach resolution. Again, the Council must
15 ask, how have the City's interests been served by these actions?
16 iii) The due process rights of VLS have been violated.
17 Case law is clear that a debarment hearing presents a threat to the contractor's
18 Constitutional right of liberty. (Gonzalez v. Freeman, supra, at page 574; Golden Day
19 Schools, Inc. v. State Dept. of Education (2000) 83 Cal.App.4th 695, 703-704). As a result,
20 due process requires certain processes be provided prior to invoking a debarment. (Ibid.) At
21 the very least the public entity seeking debarment must provide all charges and the supporting
22 evidence for those charges in a timely manner to the subject of the debarment proceeding.
23 The contractor must then be allowed an opportunity to provide a response, which can include
24 declarations, depositions, and other discovery. The hearing of the matter must be before an
25 impartial tribunal or hearing officer and must allow the subject contractor to cross examine its
26 protagonists.
27 Here, the City has provided scant information in support of its action. Further,
28 because the City has no policy regarding debarment, VLS had no information as to what
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Submittal on Behalf of V. Lopez Jr. &Sons
1 could trigger such an action either prior to bid, during construction, and up to the hearing on
2 this matter. In other words, the City's position must be that it can unilaterally determine what
3 a debarable offense is, and when it has occurred. Only a conclusory and foundationless
4 opinion of staff supports the City's position. No back up for the statements made by staff is
5 provided, and those statements are refuted, with evidence, by the statements of Doug Terry
6 and Justin Thompson. Moreover, the numerous RFI's, design modifications, and change
7 orders belie the City's position that VLS is responsible for the delay in Project completion.
8 Further, the City placed an extremely tight timeframe on VLS to respond to this
9 administrative action, and refused reasonable requests from VLS to "table"the hearing until
10 VLS and the City had the opportunity to meet and confer regarding the issues. All of this
11 was, as recited above, done in the context of a VLS offer to agree to exactly what the City
12 contended its goal objective to be. Considering that the City failed to provide any meaningful
13 support for its recommended outcome, nor any support for the payment of alleged"damages",
14 nor sufficient time for VLS to obtain discovery and provide a reasonable response, there is no
15 conclusion possible other than the due process rights of VLS have been abridged by the City.
16 iv) The facts do not warrant debarment of VLS.
17 Even assuming the City is authorized to bring this action, and further assuming that
18 the City has not proceeded illegitimately or in violation of the due process rights of VLS, the
19 facts simply do not support the recommendation of City's staff. This hearing presents a
20 situation where the City for reasons only it knows has elevated a"garden variety"
21 construction dispute into a vendetta that has far reaching ramifications for the contractor. The
22 recommendation of debarment is made against a backdrop of an undefined basis for such an
23 action. Moreover, the staff s statements in support of this are simply opinions and
24 conclusions which are contested, with evidence provided,by the statements of VLS and its
25 subcontractor(for example, the City's allegation that VLS attempted to install a residential
26 rather than commercial electric panel is flat out false, as seen by the statement of Justin
27 Thompson). At best, the City has an ill-supported"he said—she said" claim of"non-
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Submittal on Behalf of V. Lopez Jr. &Sons
I responsibility" against VLS. This is hardly the support that is necessary to warrant the
2 impairment of a Constitutionally protected right.
3 Importantly, none of the City's conclusory opinions indicate that VLS constructed this
4 Project with fraud, bad faith, or delivered a product that is not functional, all of which might
5 support a debarment action. The City's staff seeks the Council's declaration that VLS is
6 "non-responsible". The Public Contract Code, at section 1103, defines a responsible bidder
7 in the following manner: ""Responsible bidder," as used in this part, means a bidder who has
8 demonstrated the attribute of trustworthiness, as well as quality, fitness, capacity, and
9 experience to satisfactorily perform the public works contract." Thus, a"non-responsible"
10 bidder must not be trustworthy nor able to satisfactorily perform the contract. Of course, this
11 definition necessarily implicates the contract upon which the contractor is bidding.
12 Otherwise, how could a determination be made as to the contractor's ability to perform the
13 contract? Here, however, the City is seeking to obtain a declaration that VLS is not
14 trustworthy, nor able to satisfactorily perform any contract. There is no legitimate support for
15 this, so the only conclusion is that the City contends VLS is not trustworthy when it comes to
16 the construction of any contract. Again, aside from being defamatory, there is absolutely no
17 evidence of this, and because of that the City has provided none.
18 California courts have emphasized the severity of a debarment action: "Debarment is
19 never a matter of small moment." (Golden Day Schools, Inc. v. State Dept. of Education,
20 supra, at page 703) Further, the City has the burden of proving that debarment is appropriate.
21 Given the implications that this action has on VLS, and considering the conflicting evidence
22 that exists, the Council must proceed with caution. Here, the factual support for debarment is
23 extremely weak and unpersuasive. The City has not, and can not,justify the debarment of
24 VLS.
25 4. Summary -
26 Until twelve days ago, when the City blindsided VLS with the present action, VLS
27 believed and hoped that it and the City would ultimately engage in a non-litigious process to
28 resolve their different opinions regarding responsibility for Project delays, and the
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Submittal on Behalf of V. Lopez Jr. &Sons
1 concomitant competing claims for restitution. This was an outcome urged upon the City by
2 VLS for months. As VLS understood, the City was imposing liquidated damages against VLS
3 in the amount of$69,000 and VLS was asserting delay damages against the City. The City
4 decided, however, to escalate a rather ordinary construction contract dispute into a public
5 assault on the corporate character of VLS by declaring VLS "non-responsible" and debarring
6 VLS from future City projects. Then, the following day, for the first time, the City also
7 asserted that VLS was liable to the City for an additional $322,500.
8 VLS recognized that the City's course of action would have severe impacts financially
9 by compromising its bonding capacity, impairing its banking relationships, and jeopardizing
10 its participation in future public works projects. Even more troubling to VLS, a local service
11 disabled veteran owned business, was the harm that the City's conduct would have on its
12 reputation that had been built during VLS' 41 years of operations. VLS responded
13 immediately, seeking information regarding the purpose of the City's action, and also seeking
14 a process to avoid its ultimate impact of public exposure.
15 The events of the next few days, and the little information that was provided to VLS,
16 provided an increasingly focused conclusion: The City was either insisting on publicly
17 disparaging VLS, was using the leverage of the harm that will befall VLS to try to obtain
18 funds to which it is not legally entitled, or both. Some of the facts that lead to this inescapable
19 belief are:
20 1. Traditionally, the circumstances which are present here would never lead to a
21 debarment action;
22 2. The City provided VLS with no advance notice or opportunity to discuss its
23 intended course of action;
24 3. The City provided VLS with little information in support of this action;
25 4. The City set an extremely short time frame to allow VLS to review and
26 respond to this action;
27
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Submittal on Behalf of V. Lopez Jr. &Sons
1 5. The City staff report "supporting" its recommended resolution is not factually
2 accurate, contains claims of damage that are not allowable, and expressly are in breach of the
3 contract between the City and VLS;
4 6. The staff report is in many respects not factually accurate, and describe events
5 that, even if true, would not rise to the level of debarment;
6 7. The proposed resolution states as fact that VLS is "non-responsible", that VLS
7 caused delay to the Project's completion, and that VLS caused significant"financial harm"to
8 the City, none of which are true, or are at least rebuttable;
9 8. The only actual potential outcome of the proposed resolution (aside from the
10 damage caused to VLS) is that VLS would be debarred from City projects for five years. The
11 other statements contained in the proposed resolution regarding damages will ultimately be
12 decided by agreement between the parties or through litigation, such statements, in addition to
13 being non-factual and illegal, are premature;
14 9. The City refused all VLS' proposals that would have resulted in the City,
15 without the need of this hearing, achieving what was the City's purported objective: keeping
16 VLS from participating in City projects. Every proposal made by VLS, except its last offer,
17 included VLS refraining from bidding on City projects and a promise to engage in good faith
18 in a process to resolve the delay issues;
19 10. The City, through its City Manager, rejected each proposal and made removal
20 of the agenda item before it"went public" contingent upon VLS agreeing to pay the City
21 money to which it is not entitled, and for which VLS is not responsible;
22 11. Only because of the significant harm that this action will have did VLS make
23 its final offer to the City, which essentially accepted all of the City demands, included
24 payment of the entirety of the contested LD's to the City, released the City from potential
25 VLS claims, and, again, prohibited VLS from bidding on City projects for five years. The
26 only part of the City's "offer"VLS could not capitulate to is the demand made for payment of
27 the City's alleged"actual delay damages"which, by law, the City cannot seek;
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Submittal on Behalf of V. Lopez Jr. &Sons
1 12. The City rejected VLS' final offer, and additionally threatened that it would
2 pursue its claims, including those for its illegal "damages".
3 5. Conclusion -
4 City staff has presented Council with a recommended resolution that is unwarranted,
5 unsupported, contains untrue disparaging statements, states that VLS cause harm to the City
6 for sums that cannot legally be owed to the City. The facts as they have developed
7 demonstrate that this action and public hearing were neither necessary nor appropriate, and
8 have illegitimate purpose as its genesis. For all of these reasons VLS respectfully requests
9 Council carefully review and consider this submittal and vote "no" on the proposed
10 resolution.
11
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13 Dated: November 16, 2019 SCOTT R. BAKER, LAWYER
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17 SCOTT R. BAKER, Attorney for VLS
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Submittal on Behalf of V. Lopez Jr. &Sons
Table of Exhibits
Exhibit 1 Statement of Vince Lopez III
Exhibit 2 Statement of Justin"Spider" Thompson
Exhibit 3 Annotated RFI Log
Exhibit 4 Annotated CO Log
Exhibit 5 Delay Logs
Exhibit 6 July 15, 2019 emails between Vince Lopez III and Chad Stoehr
Exhibit 7 City's Final Working Day Statement
Exhibit 8 VLS Notice of Public Contract Claim
Exhibit 9 November 6, 2020 letter from VLS counsel to City Attorney
Exhibit 10 November 6, 2020 email from James Lewis to Scott Baker
Exhibit 11 November 9, 2020 email from Scott Baker to James Lewis
Exhibit 12 November 9, 2020 email from James Lewis to Scott Baker
Exhibit 13 November 9, 2020 email#2 from Scott Baker to James Lewis
Exhibit 14 November 10, 2020 email from Scott Baker to James Lewis
Exhibit 15 November 12, 2020 email from James Lewis to Scott Baker
Exhibit 16 November 12, 2020 email from Scott Baker to James Lewis
Exhibit 17 November 12, 2020 email exchange between Scott Baker and
James Lewis
Exhibit 18 November 12, 2020 email offer of VLS to City
Exhibit 19 November 12, 2020 email communications between counsel
Exhibit 20 November 13, 2020 email communications between counsel
Exhibit 1
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
V.LOPEZ JR&SONS
GENERAL
ENGINNERING
CONTRACTORS,INC.
P.O BOX 488
SANTA MARIA,CA 93456
LIC#607333 A
November 16, 2020
City of Pismo Beach City Council
760 Mattie Rd
Pismo Beach, CA 93449
RE: November 17,2010—City Council Meeting
Item 11.13
Attention Mayor and fellow City Council Members:
Good evening Mayor and City Council, I am Vince Lopez III, President of V Lopez Jr and Sons Inc.We
are a service-disabled veteran owned company who has been in business for 41 years here on the
Central Coast. Thank you for this opportunity to speak before you this evening.
My presence here today is an unfortunate one. The only reason we are here today is to bring to your
attention the unethical threats and illegal practices your City Manager has conveyed upon my company.
As you are aware, we are the contractor that completed the work on the Five Cities Lift Station and Lift
Station Maintenance Project. We submitted a bid for this project in November 2017,we were awarded
the contract and commenced work in February 2018. We have successfully operated our company for
41 years, and during that time we have NEVER been banned from bidding on any project nor have we
ever had liquidated damages withheld. Over the past week,on four different occasions,the City Manager
has demanded(documented in emails)that we pay the City of Pismo Beach$152,000 by Thursday, Nov
121'at 5pm or else. And if we failed to provide a check in the full amount by the deadline, he indicated
he would proceed to have us banned from bidding on future projects in the City unless we agreed to pay
more than contractually imposed liquidated damages,which we also believe to be unjust. I have attached
copies of his emails for your reference. I am confident that you will find his "business tactics" to be
unprofessional, intrusive, unethical and not in line with your goals of a "fair, ethical, and accountable
government." Furthermore, it has been brought to our attention that two additional General Contractors
are having similar threats made to them by the City Public Works Dept. I see that one of the contractors
is listed on your agenda to have 60k in LD's imposed.
From the beginning of this project several issues arose,that the plans and specs did not cover,requiring
necessary changes to properly complete the project. This project had 140 RFI's and 34 change orders.
Many of the change orders had several items lumped into one change order.This project could not be
built per the plans and specs that we were provided in original bid package. Many of the RFI's required
design changes which were turned into change orders.All these changes had a significant impact on the
project schedule.When time was brought up at one of our weekly meetings,Chad Stoehr(City Engineer)
assured us days (time)would not be an issue knowing the plant cannot operate without power and we
did not control PGE. Attached you will find 3 charts that show significant delays on RFI responses and
delays on issuing change orders. Some of these delays caused significant impacts on the project
completion. There was a 2-month delay from when we meet onsite with the Cities scada contractor.
Come to find out the City just hired the scada contractor a week prior to the meeting. We are dumb
• Page 2 November 16, 2020
founded on why the City would wait until the end of the project to hire a contractor when this was one of
the most critical items of the project. Also, it was brought to our attention that the scada contractor the
City hired had just filed for bankruptcy. We believe this played a significant part on the delay for them to
man the project properly. I asked Doug Terry our onsite project Supervisor to provide comments to the
staff report. Please see attached.
When time was brought up at one of our weekly meetings,Chad Stoehr(City Engineer)assured us days
(time) would not be an issue knowing the plant cannot operate without power and we did not control
PGE. Please see attached email from Chad Stoehr. Then, months later the threats began, and even
though we were initially assured that time would not be an issue we were threatened with the possibility
of withholding liquated damages.When the threats of liquated damages began, we responded with our
intent to investigate a Delay Claim based on poor design by the project design engineer. We
communicated to Public Works our willingness and desire to dismiss any Delay Claims if Public Works
would agree to retract their intent to withhold liquid damages. To date,we have not filed any claims or
lawsuits against the City in hopes of amendable communication and resolution.
It is our professional opinion that the City should pursue action against the design engineer and not the
contractor. V Lopez is not responsible for the design of the project or lack thereof. Additionally, having
the design engineering firm who designed the project, in turn, manage the project, is a direct conflict of
interest. To avoid such conflicts, most cities and counties have moved away from having the design
engineer manage any projects they designed.
We are here today to address the following:
• On 11/5/2020 1 received an email from City employee, Erica Inderlied, regarding intent to ban V
Lopez from future work with the City. The same day I forwarded it to Scott Baker for legal advice.
• 11/6/2020 Scott Baker sends letter to City Attorney. City attorney replies he was not aware of this
action and he will forward to City Manager.
11/6/2020 City Manager forwards his email to City Attorney and asks him to forward to Scott Baker.
In the City Manger's response to us, he stated if we agree to pay the City$152,000 by 11/12/2020
5pm he would not put the request for ban on the 11/17/20 council agenda. This is the first time we
heard about any damage request by the City other than liquid damages.
11/9/2020 Scott Baker sends City Manager another letter and the City manager responds the same
day with the same settlement offer stating if we don't agree its going on the agenda.On 11/12/2020
Scott Baker our attorney sends settlement offer to the City Manager and again the City Manager
refuses the offer and demands that we agree to pay(settle)$152,000 or endure a ban.
This is genuinely concerning to me as this is the first time we have heard about these costs.The city has
not provided us, to date,with any back up for these charges and,furthermore,the City Manager has flat
out refused to provide any backup (even though we have requested such). The practice of obtaining
something, especially money,through force or threat is the definition of extortion. Considering the short
amount of time the City manager allowed us to respond and provide payment(without providing backup
documentation explaining the costs), is, by definition, extortion. In all my years operating a successful
business, I have never experienced such unprofessionalism, not to mention, unprofessionalism from a
public official.
I respectfully ask that you consider all the facts prior to making your decision. This agenda item will be
detrimental to my company's reputation. And, unfortunately, since I did not meet the City Manager's
deadline with payment, this unnecessary issue has already become public knowledge and I am certain
it will have negative consequences on our future business dealings and overall reputation.
• Page 3 November 16, 2020
Please see the attached correspondence.
Thank you for your time and consideration.
Respectfully,
Vince Lopez III
TEL 805-928-1198
FAX 805-928-8262
Lic#607333 A
Certs:SDVBE/DBE/MBE/SBE
SINCE 1979
RFI DELAYS - MAINTENANCE PROJECT
RFI NO. SCOPE DATE SUBMITTED RESPONSE DATE
15 Door Frames Spyglass Bldg 5/30/2018 7/17/2018
18 Roof Connection 8/14/2018 8/31/2018
19 Roof Connection 8/15/2018 9/4/2018
CHANGE ORDER APPROVAL DELAYS
C.O.t# SCOPE DATE SUBMITTED RESPONSE DATE
4 90 Degree Elbow in Drywall 5/16/18, 5/31/18, 6/1/18 6/27/2018
5 Precast M/T to Polymer 6/15/2018 7/13/2018
6 Pothole Forcemaing Hwy 1 7/2/2018 8/10/2018
8 Additional Excavation & Backfill 7/2/2018 9/10/2018
9 Additional Drop Bowl Corrilitos 6/15/2018 9/20/2018
10 Insertavalve 8/21/2018 9/20/2018
11 Traffic Loops 9/18/2018 10/30/2018
12 Bollards & AirVac 12/19/2018 1/29/2019
13 Hot Tap 12' Main forAirVac 12/21/2018 1/29/2019
15 Waterstop at Drain Box 3/26/2019 4/11/2019
16 SS Piping Installation of DI 4/16/2019 5/16/2019
17 SS Palisades New Vault 5/14/2019 6/14/2019
20 Pave Additional Spyglass 5/14/2019 7/2/2019
21 400 AMP 1240V Cabinet 7/10/2019 7/22/2019
RFI Delays - Five Cities Lift Station
RFI NO. SCOPE DATE SUBMITTED RESPONSE DATE
17 Concrete Headwall 2/11/2018 4/16/2018
18 6" Discharge Plan 3/12/2018 3/29/2018
19 Discharge Plan 3/14/2018 4/29/2018
23 Tie In Sequence 5/29/2018 6/21/2018
2-11,
Dave-
I am in receipt of and have reviewed Mr. Baker's correspondence of November 6. While I am absolutely
confident to move forward I am interested in his offer of an agreement that his client would not bid for
work with the city for a period of years. Please forward the following response to him:
Mr. Baker-
Our City Attorney, Dave Fleishman, has forwarded to me a letter from you dated November 6, 2020. In
this letter you state your client would be open to an agreement that would state they would not bid on
city projects for a period of years. I'm open to discussing an agreement like this with a few other
caveats that are most important to the City. Let me be clear, however, that we plan to move ahead with
the hearing on November 17. The challenges we dealt with and the costs we incurred have caused
significant damage to the City and I believe it is incumbent on us to protect the City so it doesn't suffer
the same consequences on future City projects. I am aware of your litigation in Grover Beach, and our
action will be a reasonable and measured one that must be taken to protect our City in the future from
the setbacks and financial damages suffered by Pismo Beach on this project. It is time that your client's
ability to bring poor/untimely workmanship and financial damages to the City,which is already
suffering, comes to an end.
This said, I would consider removing the item indefinitely for an agreement that states:
1) V. Lopez and Sons will not bid on any project sent out for bids by the City of Pismo Beach for a period
of 25 years from the date of the agreement.
2) V. Lopez and Sons will permanently drop all claims against the City of Pismo Beach and will hold the
City harmless against any claims arising out of the project that is the subject of this matter, entering into
an appropriate release agreement.
3) The total approximate financial loss to the City as a direct result of V. Lopez is$322,500,which
includes additional project management and inspection fees, additional engineering services during
construction (ESDC), additional costs and working days associated with change orders the City was not
obligated to issue.This does not include liquidated damages or City staff time or equipment costs. As
part of the agreement,V. Lopez and Sons will remit 50%of this amount back to the City, or
$161,250. Alternatively,the City would retain the entire remaining amount of the retention, $152,574,
and V. Lopez would indemnify the City against any potential claims by subcontractors on the project. As
part of this,assessment of liquidated damages would be dropped, and the City would release V. Lopez
from any claims for delay or liquidated damages.
Please let me know of your decision by Tuesday, November loth at 5 pm. I cannot make changes to the
agenda after this date.
Sincerely,
Jim Lewis
City Manager
Regards,
Jim
James R. Lewis
2
Vince Lopez Jr
From: Chad Stoehr <CStoehr@PismoBeach.org>
Sent: Monday, July 15, 2019 11:29 AM
To: Vince Lopez Jr
Cc: Butch Lopez; doug@vlopezjrandsons.com;Adam Rianda;Joshua Reynolds; Russell
Fleming
Subject: RE: Executed contract from the City of Pismo Beach
Vince,
I am fine with additional days and I am aware of what Spider indicated, but at this point we really don't know whether it
is going to be 8 weeks, 10 weeks, or 12 weeks. It could be even longer than that.
What you have requested is acceptable, 20 days with a note that additional days may be required based on PGE. 20
days will take you out to end of September, at that time, I expect you should know more from PGE and be keeping
myself and WSC updated over the next couple months at our bi-weekly meetings, and as we approach that time we will
have a discussion to add more days based on what we know.
Thanks
Chad
From:Vince Lopez Jr [mailto:Vince@VLopezlrand5ons.com]
Sent: Monday,July 15, 2019 5:51 AM
To:Chad Stoehr<CStoehr@PismoBeach.org>
Cc: Butch Lopez<Butch@vlopezjrandsons.com>; doug@vlopezjrandsons.com
Subject: RE: Executed contract from the City of Pismo Beach
Chad, at the meeting Spider said PGE was 10 weeks out after panel was installed and I thought you said you were fine
with the additional days.This doesn't reflect the time for PGE?
Vince Lopez III
President
V.LopezJrand Sons, Inc
Since 1979
805-928-1198 TEL
805-928-8262 Fax
805-928-1179 Sales Dept
CONFIDENTIALITY NOTICE:
This e-mail and any attachments contain information from Lopez & Sons, Inc., and are intended solely for the
use of the named recipient or recipients. This e-mail may contain privileged communications or work product.
Any dissemination of this e-mail by anyone other than an intended recipient is strictly prohibited. If you are not
a named recipient, you are prohibited from any further viewing of the e-mail or any attachments or from making
any use of the e-mail or attachments. If you believe you have received this e-mail in error, notify the sender
immediately and permanently delete the e-mail, any attachments, and any copies thereof from any drives or
storage media and destroy all printouts of the e-mail or attachments.
1
,,��TY pF•.�
PUBLIC HEARING NOTICE
z CITY COUNCIL
iSMo Ssv
NOTICE IS HEREBY GIVEN that on Tuesday, November 17, 2020 at 6:00 p.m. or as soon
thereafter as possible, the Pismo Beach City Council will hold a public hearing for the following
purpose:
PUBLIC HEARING AGENDA:
Non-Responsible Bidder: V. Lopez Jr. & Sons, Inc.
Description:Staff recommendation to declare V. Lopez Jr. and Sons as a non-responsible bidder
thereby disqualifying them from performing future work for the City of Pismo Beach.
Details about ways to participate in this hearing will be provided on the agenda posted for the
meeting online at pismobeach.org/agenda, and on the bulletin board at City Hall. The agenda will
be posted in the afternoon of November 12, 2020.
You have a right to comment on these projects and their effect on our community.
Interested persons are invited to participate in the hearing or otherwise express their views and
opinions regarding the proposed projects. Written and voicemail comments are welcomed prior
to the hearing. Written comments prepared prior to the hearing may be submitted to the City
Clerk's Office by mail or delivery to the utility bill drop box at 760 Mattie Road, Pismo Beach, CA
93449, by fax at (805) 773-7006, or by email at citycouncilna.pismobeach.org. Oral comment may
be provided prior to the hearing by calling 805-556-8299 and leaving a voice message. Please
state and spell your name, and identify your item of interest. Generally, written comment may be
submitted by email up until the start of the public comment period during this item. Every effort
will be made to provide an opportunity for live public comment during the meeting, but because
the City cannot guarantee the quality of internet access or video conferencing facilities for the
meeting, live public comment may not be available at every meeting. Please refer to the agenda
for this meeting for specific instructions for participation.
Staff reports, plans and other information related to these projects are available for public review
from the City Clerk's Office, by emailing City Clerk Erica Inderlied at einderlied@pismobeach.org.
The meeting agenda and staff report will be available no later than the Thursday before the
meeting and may be obtained upon request by mail or by visiting www.pismobeach.ora. The
Council meeting will be televised live on Charter Cable Channel 20 and streamed on the City's
website.
PLEASE NOTE:
If you challenge the action taken on this item in court, you may be limited to raising only those
issues you or someone else raised at the public hearing described in this notice, or in written
correspondence delivered to the City of Pismo Beach at, or prior to, the public hearing.
For further information, please contact Erica Inderlied, City Clerk, at einderliedC@_pismobeach.org
or 805-773-7003.
Erica Inderlied
City Clerk
Vince Lopez Jr
From: Erica Inderlied <Elnderlied@PismoBeach.org>
Sent: Thursday, November 5, 2020 4:21 PM
To: vince@vlopezjrandsons.com
Subject: Notice of Public Hearing - November 17, 2020 Pismo Beach City Council Meeting
Attachments: 113 Notice Non-Responsible Bidder 2020-11-17 Posting Copy.pdf
Hello Mr. Lopez, attached is a public hearing notice for an item our City Council will hear at its November 17, 2020
meeting. We invite you to participate in this hearing if you wish. The agenda will be published in the afternoon of
Thursday, November 12, and will include instructions for joining the virtual meeting. (Zoom Meeting ID: 848 2371 5585;
Meeting link https:Hus02web.zoom.us/i/84823715585)
If you wish to address the City Council on this item, you will be invited to make your statement following staffs
presentation of the staff report. City staff will then have the opportunity to make a brief rebuttal, after which you will have
the opportunity to do the same. The Council will then deliberate on the item.
You may also submit written comment to the City Council in advance of the meeting at citycouncil(a)pismobeach.org. The
agenda and staff report will be published at www.i)ismobeach.org/agenda, and I will send you copies of these documents
when they are published. Please let me know if you have any questions.
If you could please confirm your receipt of this email, it would be appreciated. Thank you.
Erica Inderlied
City Clerk
805-773-7003 (desk)
530-306-2102 (mobile)
760 Mattie Road, Pismo Beach, CA 93449
einderlied(o)pismobeach.org
1
110 S_ Mary Avenue. Suite 2-252
Scott R. Baker, Lawyer Nipomo, California 93444
Phoney 805-704-837z
E-Mail:sr-baker'a pacbetl.net
November 6, 2020
Via Electronic Mail: dfleishman@rwglaw.com
David M. Fleishman, Esq.
RWG Law
847 Monterey Street, Suite 206
San Luis Obispo, CA
Re: Five Cities Drive Lift Station Maintenance Project
Dear Mr. Fleishman:
I am writing on behalf of V. Lopez Jr. & Sons relative to the referenced Project and an email
received by my client yesterday,November 5, 2020. Attached to the City's email is a"Public Hearing
Notice" announcing the City's intent to hold a public City Council meeting on November 17, 2020 for
the purpose of considering City Staffs recommendation that my client be deemed a"non-responsible
bidder" and disqualified from performing future work for the City (enclosed). Although neither the
email nor the attached notice make reference to the Project, I am assuming that the email and the notice
arise from my client's work on the Project. Because I know you represent the City regarding the issues
between the City and my client related to the Project, I am directing this letter to you, but request that
you immediately convey its contents to the appropriate City personnel. Also,I ask that you immediately
forward to me, electronically if possible, all reports and supporting documentation generated by the City
or its consultants that relate to the City Staff s recommendation.
My client and I are surprised and disappointed at the City's stated intent to bring this matter
before the Council and the public. We consider the Staffs recommendation to be unwarranted and
punitive. The apparent rancor and adversariness demonstrated by the City regarding what should be
resolvable contract issues is truly baffling. For more than a year my client and/or I have attempted to
address the parties' conflicting delay claims in an amicable and efficient manner. Following your
February 5, 2020 letter to my client I have communicated to you, on no less than three occasions,
suggestions that our clients engage in some form of meaningfid dispute resolution and avoid an
adversarial approach to these issues. Neither the City nor you ever responded to these proposals,but
have consistently taken the opposite approach, including imposing liquidated damages,and threatening
(through your office)pursuit of a False Claims Act action and insinuating my client engages in efforts to
defraud public entities. I am flummoxed by this type of response and wonder if there is some genesis
for it of which I am not aware. If so,please educate me so we are all dealing from the same informed
perspective.
The intent of the City to bring its contrived version of my client's performance on the Project to
public attention is wrongful, and can be viewed only as an irresponsible and probably actionable attempt
to damage my client and its reputation. Therefore, consider this our request that the City cease and
desist from this course of action, and revoke its Notice of Public Hearing. As we have stated and
requested for months, my client will gladly participate in private conversations aimed at understanding
each sides'positions and working toward a non-litigious resolution. Given the inexplicable animosity
that apparently drives the City's conduct relative to my client, we would also consider entering into
some type of agreement to not bid on City projects for a specified period of time as part of the overall
reconciliation of this matter.
According to the email from the City enclosing the Notice of Public Hearing, the notice and
agenda will be posted on November 12, 2020. My client and I request that this action not be taken, and
that, as stated above, the Notice be revoked. If the City proceeds on its present course significant and
unwarranted damage to my client will be the natural and inevitable result. My client cannot and will not
tolerate such an occurrence. Please notify the City of our position and also reiterate my client's
continued preference and willingness to privately and informally meet to address the issues. Please also
provide a response as soon as possible, but not later than November 12, 2020.
Very truly yours,
Digitally signed by Scott R.Baker
ScottR. Bakere ail=sBbaker@cott R. acbell.net
`l R. D II��CC email=sr-baker@pacbelLnep c=US
Date:2020.1 L0611:58.31
Scott R. Baker
cc Vince Lopez III
2
Vince Lopez Jr
From: Scott Baker <sr-baker@pacbell.net>
Sent: Friday, November 6, 2020 12:25 PM
To: David M. Fleishman
Cc: Ben Fine;Jorge Garcia;James R. Lewis
Subject: Re: Five Cities Lift Station
Mr. Fleishman
Thank you for the prompt response and information.
Scott Baker
Sent from my iPhone
On Nov 6, 2020, at 12:21 PM, David M. Fleishman<DFleishman@rwglaw.com>wrote:
Mr. Baker,
Thank you for your correspondence, which by CC of this email to City staff I am providing a copy.
Our firm has not been involved in advising City staff on this particular matter, so 1 have not seen any of
the staff materials or other documentation leading to this recommendation. I will, however,forward
you a link to the agenda packet once it is published. In the alternative,you may go to the City's website
yourself and download the agenda when it is published. I anticipate the agenda will be published some
time on November 12. 1 will be seeing the staff report and supporting material on this matter at the
same time you are.
As for your demand for the City to cease and desist in proceeding with the hearing described in the
public hearing notice, I would anticipate that the City will decline your demand. I will certainly advise
you if the situation is otherwise.
Dave Fleishman
Of Counsel
<OF5B3E313FE74EDC8173672FEA1DD3D4.png>
RICHARDS WATSON GERSHON
847 Monterey Street,Suite 206
San Luis Obispo,CA 93401
T:213.626.8484
D:805.706.0962
F:213.626.0078
W:rw¢law.com
This email may contain material that is confidential,privileged and/or attorney work product for the sole use of the intended
recipient.Any review,reliance or distribution by others or forwarding without express permission is strictly prohibited.If you
are not the intended recipient,please contact the sender and delete all copies.
<1106 2020 to counsel.pdf>
1
On Nov 6, 2020, at 11:59 AM,Scott Baker<sr-bakerPpacbell.net>wrote:
Please see attached correspondence to David Fleishman regarding the referenced
matter and my client, V. Lopez Jr. & Sons.
Thank you,
Scott Baker
Click here to report this email as spam.
<1106 2020 to counsel.pdf><11.B Notice Non-Responsible Bidder 2020-11-17 Posting
Copy.pdf>
2
Vince Lopez Jr
From: Scott Baker <sr-baker@pacbell.net>
Sent: Monday, November 9, 2020 7:28 AM
To: David M. Fleishman;James R. Lewis
Cc: Vince Lopez III; Butch Lopez
Subject: V Lopez Jr. & Sons
Via Electronic Mail
James R. Lewis, City Manager
JLewis@PismoBeach.org
City of Pismo Beach
Re: Five Cities Lift Station/V. Lopez Jr. &Sons
Dear Mr. Lewis:
David Fleishman forwarded me your response to my letter of November 6, 2020 regarding the referenced matter and
the City's Notice of Public Hearing ("Notice") related to my client,V. Lopez & Sons. (Again, thanks to Mr. Fleishman for
promptly forwarding my letter to you and your response to me).
My client's President was traveling out of the area when the City's Notice was sent last Thursday afternoon (November
5, 2020 at 4:21 p.m.). He will, again, be traveling back to the area today (November 9, 2020) and will not be available for
communication until at least late afternoon. He has authorized me to communicate with you regarding this matter and
negotiate at least a place holding agreement that will allow the issues raised by your letter to me to be addressed fully
and fairly.
First let me indicate that my client and I consistently have attempted to understand and resolve the issues in an
amicable and businesslike manner. Do not take my silence on some of the "editorial" statements made in your letter as
any sort of agreement by either my client or me as to accuracy or legitimacy of those statements. Rather, I would like to
focus on moving toward a reasonable and efficient resolution. Unfortunately, my client and I are approaching this
situation with a significant disadvantage: We do not know the basis of the City's current position. Previously, we
understood that the parties have divergent views on the causes and impacts of the delays associated with the Project.
This is something that I hoped could be discussed and resolved short of adversarial proceedings. Then,for the first time
this past Thursday afternoon,the City advised my client that it considered Lopez& Sons"non responsible"and would
seek the City Council's imprimatur on that opinion. The repercussions to my client from such a determination are
obvious and serious. Then, in your Friday response to me, you indicate that the City further believes my client to have
caused more than $320,000 damage to the City. Again, this is the first we have heard such a claim from the City, and
there is scant support for this position provided in your response.
One thing appears clear, however. The City and my client seem to hold significantly distinct views of this Project,the
problems and delays associated with it, and of course, the reason for those issues. As I stated in my letter forwarded to
you on Friday, I do not believe the City is warranted in publicly airing its position regarding my client,especially in light of
the City's tacit rejection of our requests to engage in informal "meet and confer" options as dictated by the Public
Contract Code, and frankly, by common sense. I am greatly concerned that this matter has reached this"critical mass"
point due to misconception or lack of understanding by one or both of the parties. I think a less draconian approach is,
considering the impact that the City's proposed course of action will have, at least worth some appreciable effort.
1
Your response states that the City's interest is to "protect the City so it doesn't suffer the same consequences on future
City projects. " That objective is met by my client's offer to bind itself to abstaining from bidding on any City project for
a specified period of time—certainly for as long as it takes for the remaining issues to be analyzed, discussed, and
resolved in one manner or another. During this time, assuming that the City will agree to engaging in some process that
will allow the exchange of information, and civil discourse regarding our positions as to what that information suggests,
my client will also refrain from pursuing any claims against the City,_
The foregoing would allow the parties to each better understand the other's viewpoint,the basis for that viewpoint, and
determine whether a potential for less adversarial resolution exists. One thing I have learned in more than forty years of
practice is that disputes are rarely "black and white" and that they often spiral out of control, unnecessarily, because of
a lack of full disclosure of the basis for the competing positions, and an opportunity to fully understand those positions
in light of the information that is actually available. I am concerned that this situation is heading in that direction, but
hopeful that such a result can be avoided by proceeding as suggested above, or in some other manner that avoids the
"cliff' presented by the City's current course of action.
On behalf of my client I can promise a fair and reasoned evaluation of the City's claims once we have the basis and
support for those claims identified and provided. In turn, I would ask that the City reciprocate and reasonably consider
the position of my client, and the support for that position that we can provide. During this effort, I propose that the
Notice be revoked,tabled or not issued; that V. Lopez &Sons refrain from any City project bids and also refrain from
pursuing any claims against the City; and, that the parties agree to a process to exchange positions, and information, and
then engage in good faith dialogue in an attempt to resolve, or at least narrow, the division between them.
Please let me know the City's position as soon as possible so that I can advise my client, and we can respond accordingly.
Very truly yours,
Scott R. Baker
z
Vince Lopez Jr
From: James Lewis <J Lewis@ PismoBeach.org>
Sent: Monday, November 9, 2020 4:28 PM
To: Scott Baker; Fleishman, Dave
Cc: Vince Lopez III; Butch Lopez
Subject: RE:V Lopez Jr.&Sons
Importance: High
Mr. Baker,
Thank you for your email. As you might imagine, in the week after an election, my work day is extremely full. As such, I
will not be able to write as full a response to your email as I might otherwise wish to. That being said, my proposal was
not intended as a request to open negotiations. Given the history of the City's relationship with V. Lopez on the Five
Cities Lift Station project, I do not believe that extended discussions or as you put it, "a process to exchange positions,
and information, and then engage in good faith dialogue,"will benefit the City.
You and your client have, throughout the pendency of the project, taken an adversarial approach with the City regarding
the delays in the project, and you have repeatedly threatened to pursue the City for compensation for these delays, all
without providing the City any information whatsoever regarding the foundation for such claims. And your client has
repeatedly blamed others for the delay on the project without any recognition of its own role in that delay. That is
hardly acting in good faith, and I don't believe that additional time will cause your client to have a material change of
heart. I do not intend to argue with you over the legal claims either, as I have neither the time nor inclination to do so.
We intend to proceed with the agenda item on November 17 as previously stated in the notice of public hearing.
If your client does wish to accept the settlement proposal I previously sent, please communicate directly with the City
Attorney, Dave Fleishman,who is copied here. He has not been involved in the public hearing matter, but he would be
essential in formulating any settlement agreement that included a withdrawal of the agenda item for next week's
agenda.
Regards,
Jim
James R. Lewis
City Manager
City of Pismo Beach, CA
"Classic California"
805-773-7003
www.pismobeach.org
-----Original Message-----
From:Scott Baker<sr-baker@pacbell.net>
Sent: Monday, November 9, 2020 7:28 AM
To: Fleishman, Dave<dfleishman@rwglaw.com>;James Lewis<JLewis@PismoBeach.org>
Cc:Vince Lopez III <vince@vlopezjrandsons.com>; Butch Lopez<butch@vlopezjrandsons.com>
Subject:V Lopez Jr. &Sons
External Email
1
Via Electronic Mail
James R. Lewis, City Manager
JLewis@PismoBeach.org
City of Pismo Beach
Re: Five Cities Lift Station/V. Lopez Jr. &Sons
Dear Mr. Lewis:
David Fleishman forwarded me your response to my letter of November 6, 2020 regarding the referenced matter and
the City's Notice of Public Hearing ("Notice") related to my client, V. Lopez&Sons. (Again, thanks to Mr. Fleishman for
promptly forwarding my letter to you and your response to me).
My client's President was traveling out of the area when the City's Notice was sent last Thursday afternoon (November
5, 2020 at 4:21 p.m.). He will, again, be traveling back to the area today (November 9, 2020) and will not be available for
communication until at least late afternoon. He has authorized me to communicate with you regarding this matter and
negotiate at least a place holding agreement that will allow the issues raised by your letter to me to be addressed fully
and fairly.
First let me indicate that my client and I consistently have attempted to understand and resolve the issues in an
amicable and businesslike manner. Do not take my silence on some of the "editorial" statements made in your letter as
any sort of agreement by either my client or me as to accuracy or legitimacy of those statements. Rather, I would like to
focus on moving toward a reasonable and efficient resolution. Unfortunately, my client and I are approaching this
situation with a significant disadvantage: We do not know the basis of the City's current position. Previously, we
understood that the parties have divergent views on the causes and impacts of the delays associated with the Project.
This is something that I hoped could be discussed and resolved short of adversarial proceedings. Then, for the first time
this past Thursday afternoon,the City advised my client that it considered Lopez&Sons "non responsible" and would
seek the City Council's imprimatur on that opinion. The repercussions to my client from such a determination are
obvious and serious. Then, in your Friday response to me,you indicate that the City further believes my client to have
caused more than $320,000 damage to the City. Again, this is the first we have heard such a claim from the City, and
there is scant support for this position provided in your response.
One thing appears clear, however. The City and my client seem to hold significantly distinct views of this Project,the
problems and delays associated with it, and of course,the reason for those issues. As I stated in my letter forwarded to
you on Friday, I do not believe the City is warranted in publicly airing its position regarding my client, especially in light of
the City's tacit rejection of our requests to engage in informal "meet and confer" options as dictated by the Public
Contract Code, and frankly, by common sense. I am greatly concerned that this matter has reached this"critical mass"
point due to misconception or lack of understanding by one or both of the parties. I think a less draconian approach is,
considering the impact that the City's proposed course of action will have, at least worth some appreciable effort.
Your response states that the City's interest is to "protect the City so it doesn't suffer the same consequences on future
City projects. " That objective is met by my client's offer to bind itself to abstaining from bidding on any City project for
a specified period of time—certainly for as long as it takes for the remaining issues to be analyzed, discussed, and
resolved in one manner or another. During this time, assuming that the City will agree to engaging in some process that
will allow the exchange of information,and civil discourse regarding our positions as to what that information suggests,
my client will also refrain from pursuing any claims against the City.
The foregoing would allow the parties to each better understand the other's viewpoint, the basis for that viewpoint,and
determine whether a potential for less adversarial resolution exists. One thing I have learned in more than forty years of
2
practice is that disputes are rarely "black and white'and that they often spiral out of control, unnecessarily, because of
a lack of full disclosure of the basis for the competing positions, and an opportunity to fully understand those positions
in light of the information that is actually available. I am concerned that this situation is heading in that direction, but
hopeful that such a result can be avoided by proceeding as suggested above, or in some other manner that avoids the
"cliff' presented by the City's current course of action.
On behalf of my client I can promise a fair and reasoned evaluation of the City's claims once we have the basis and
support for those claims identified and provided. In turn, I would ask that the City reciprocate and reasonably consider
the position of my client,and the support for that position that we can provide. During this effort, I propose that the
Notice be revoked, tabled or not issued; that V. Lopez &Sons refrain from any City project bids and also refrain from
pursuing any claims against the City; and, that the parties agree to a process to exchange positions, and information, and
then engage in good faith dialogue in an attempt to resolve, or at least narrow, the division between them.
Please let me know the City's position as soon as possible so that I can advise my client, and we can respond accordingly.
Very truly yours,
Scott R. Baker
3
Vince Lopez Jr
From: Scott Baker <sr-baker@pacbell.net>
Sent: Monday, November 9, 2020 5:24 PM
To: James Lewis
Cc: Fleishman, Dave;Vince Lopez III; Butch Lopez
Subject: Re:V Lopez Jr. & Sons
Mr. Lewis,
I am disheartened the City is unwilling to engage in any discussions prior to embarking on this unfortunate and
damaging course of action.You state that my client has "repeatedly threatened" delay claims throughout the pendency
of the Project.That is not true. Lopez, in fact, responded to the City's threats of imposing liquidated damages, which also
have been asserted without support or meaningful discussion. We have continuously and consistently sought dialogue
and information exchange in an attempt to resolve this obvious disparity of opinions. That the City insists on this
precipitous action without first exploring less damaging actions can be seen only as punitive and is extremely baffling.
Lopez is willing to provide the City with what you state is your objective, not having Lopez construct City projects.Yet
you reject that, without discussion,for what end??
Please immediately provide me with all documentation that relates to the City's position and supports its decision to
hold a public determination by the Council to disqualify Lopez as a City contractor. It is well settled that Lopez is entitled
to due process in this proceeding, including advisement of the basis of the City's position and all supporting
documentation for that position. Lopez is also entitled to a reasonable opportunity to prepare and provide a response
and to a fair hearing. Given your insistence that the Council hear this matter on November 17, 2020,and further that
only a week prior Lopez has virtually no understanding of, and absolutely no documentary support for, the City's
actions, I cannot envision a scenario whereby Lopez will be reasonably provided that to which it is entitled with respect
to the City's due process obligations.
I will expect the requested position statement and supporting evidence by tomorrow.
Thank you,
Scott Baker
Sent from my iPhone
> On Nov 9, 2020, at 4:29 PM,James Lewis<JLewis@pismobeach.org>wrote:
> Mr. Baker,
>Thank you for your email. As you might imagine, in the week after an election, my work day is extremely full. As such,
I will not be able to write as full a response to your email as I might otherwise wish to. That being said, my proposal was
not intended as a request to open negotiations. Given the history of the City's relationship with V. Lopez on the Five
Cities Lift Station project, I do not believe that extended discussions or as you put it, "a process to exchange positions,
and information, and then engage in good faith dialogue," will benefit the City.
>
>You and your client have,throughout the pendency of the project,taken an adversarial approach with the City
regarding the delays in the project, and you have repeatedly threatened to pursue the City for compensation for these
delays, all without providing the City any information whatsoever regarding the foundation for such claims. And your
client has repeatedly blamed others for the delay on the project without any recognition of its own role in that delay.
That is hardly acting in good faith, and I don't believe that additional time will cause your client to have a material
1
change of heart. I do not intend to argue with you over the legal claims either, as I have neither the time nor inclination
to do so. We intend to proceed with the agenda item on November 17 as previously stated in the notice of public
hearing.
> If your client does wish to accept the settlement proposal I previously sent, please communicate directly with the City
Attorney, Dave Fleishman,who is copied here. He has not been involved in the public hearing matter, but he would be
essential in formulating any settlement agreement that included a withdrawal of the agenda item for next week's
agenda.
> Regards,
>Jim
>James R. Lewis
>City Manager
> City of Pismo Beach, CA
> "Classic California'
>805-773-7003
>www.pismobeach.org
>-----Original Message-----
• From: Scott Baker<sr-baker@ pacbell.net>
>Sent: Monday, November 9, 2020 7:28 AM
>To: Fleishman, Dave<dfleishman@rwglaw.com>;James Lewis<JLewis@PismoBeach.org>
>Cc:Vince Lopez III <vince@vlopezjrandsons.com>; Butch Lopez<butch@vlopezjrandsons.com>
>Subject: V Lopez Jr. & Sons
> External Email
>Via Electronic Mail
>James R. Lewis, City Manager
>JLewis@PismoBeach.org
>City of Pismo Beach
> Re: Five Cities Lift Station/V. Lopez Jr. &Sons
> Dear Mr. Lewis:
> David Fleishman forwarded me your response to my letter of November 6, 2020 regarding the referenced matter and
the City's Notice of Public Hearing ("Notice") related to my client, V. Lopez&Sons. (Again,thanks to Mr. Fleishman for
promptly forwarding my letter to you and your response to me).
> My client's President was traveling out of the area when the City's Notice was sent last Thursday afternoon (November
5, 2020 at 4:21 p.m.). He will, again, be traveling back to the area today(November 9, 2020) and will not be available for
communication until at least late afternoon. He has authorized me to communicate with you regarding this matter and
negotiate at least a place holding agreement that will allow the issues raised by your letter to me to be addressed fully
and fairly.
> First let me indicate that my client and I consistently have attempted to understand and resolve the issues in an
amicable and businesslike manner. Do not take my silence on some of the "editorial" statements made in your letter as
2
any sort of agreement by either my client or me as to accuracy or legitimacy of those statements. Rather, I would like to
focus on moving toward a reasonable and efficient resolution. Unfortunately, my client and I are approaching this
situation with a significant disadvantage: We do not know the basis of the City's current position. Previously, we
understood that the parties have divergent views on the causes and impacts of the delays associated with the Project.
This is something that I hoped could be discussed and resolved short of adversarial proceedings. Then, for the first time
this past Thursday afternoon, the City advised my client that it considered Lopez&Sons "non responsible" and would
seek the City Council's imprimatur on that opinion. The repercussions to my client from such a determination are
obvious and serious. Then, in your Friday response to me,you indicate that the City further believes my client to have
caused more than$320,000 damage to the City. Again,this is the first we have heard such a claim from the City, and
there is scant support for this position provided in your response.
>One thing appears clear, however. The City and my client seem to hold significantly distinct views of this Project,the
problems and delays associated with it, and of course,the reason for those issues. As I stated in my letter forwarded to
you on Friday, I do not believe the City is warranted in publicly airing its position regarding my client, especially in light of
the City's tacit rejection of our requests to engage in informal "meet and confer" options as dictated by the Public
Contract Code, and frankly, by common sense. I am greatly concerned that this matter has reached this "critical mass"
point due to misconception or lack of understanding by one or both of the parties. I think a less draconian approach is,
considering the impact that the City's proposed course of action will have, at least worth some appreciable effort.
>Your response states that the City's interest is to "protect the City so it doesn't suffer the same consequences on
future City projects. " That objective is met by my client's offer to bind itself to abstaining from bidding on any City
project for a specified period of time—certainly for as long as it takes for the remaining issues to be analyzed, discussed,
and resolved in one manner or another. During this time, assuming that the City will agree to engaging in some process
that will allow the exchange of information, and civil discourse regarding our positions as to what that information
suggests, my client will also refrain from pursuing any claims against the City.
>The foregoing would allow the parties to each better understand the other's viewpoint, the basis for that viewpoint,
and determine whether a potential for less adversarial resolution exists. One thing I have learned in more than forty
years of practice is that disputes are rarely "black and white" and that they often spiral out of control, unnecessarily,
because of a lack of full disclosure of the basis for the competing positions, and an opportunity to fully understand those
positions in light of the information that is actually available. I am concerned that this situation is heading in that
direction, but hopeful that such a result can be avoided by proceeding as suggested above, or in some other manner
that avoids the "cliff' presented by the City's current course of action.
>On behalf of my client I can promise a fair and reasoned evaluation of the City's claims once we have the basis and
support for those claims identified and provided. In turn, I would ask that the City reciprocate and reasonably consider
the position of my client, and the support for that position that we can provide. During this effort, I propose that the
Notice be revoked, tabled or not issued; that V. Lopez&Sons refrain from any City project bids and also refrain from
pursuing any claims against the City; and,that the parties agree to a process to exchange positions, and information, and
then engage in good faith dialogue in an attempt to resolve, or at least narrow, the division between them.
> Please let me know the City's position as soon as possible so that I can advise my client,and we can respond
accordingly.
>Very truly yours,
>Scott R. Baker
3
Vince Lopez Jr
From: Scott Baker <sr-baker@pacbell.net>
Sent: Tuesday, November 10, 2020 2:42 PM
To: James R. Lewis; David M. Fleishman
Cc: Vince Lopez III; Butch Lopez
Subject: Five Cities Lift Station/V Lopez
Attachments: Not of Pot Claim.pdf; 02 05 2020 f atty for PB.pdf; 06 29 2020 to City Atty.pdf
Dear Mr. Lewis,
Although I believe most of the points raised in your communications to me on November 6, 2020 and
November 9, 2020 have been addressed, albeit hastily, I wanted to provide the City with further context in
hopes that you will delay your currently stated agenda and allow the Parties to discuss the issues informally. As
Lopez has already agreed to forebear from bidding any City projects, or pursuing any claims against the City,
during the time we attempt informal resolution, I cannot see how the City would in any manner be prejudiced
by such a course of action. Another reason that I want to provide greater context to your assertions and our
responses is that, in re-reading the correspondences, I detect that there is some level of misinformation or lack
of information that is driving your claims.
The assertions will be addressed in the order in which they appeared in your correspondence to me:
From your November 6, 2020 email-
1. "The challenges we dealt with and the costs we incurred have caused significant damage to the City and I
believe it is incumbent on us to protect the City so it doesn't suffer the same consequences on future City projects."
Response: You indicate two things here:; First, that the City dealt with challenges and incurred costs resulting in
significant damage to the City. I am assuming that you are alleging these challenges and damages are the result of the
conduct of my client. Until your November 6,2020 email Lopez was aware only that the City intended to impose
liquidated damages (LD's)due to the extended delivery time for this Project. As of this moment, we are in the dark as to
the scope and extent of these stated damages, and have seen no support for them. Informal discussions between Lopez
and the City would allow you to present, and Lopez to consider and respond to, your assertions in this regard. Second,
you state the City's objective in pursuing this course of action is to protect the City from a recurrence of this
situation. Again, Lopez has already indicated that it would agree not to bid on City projects for a specified period of time,
so no formal action in this regard is necessary, and the stated objective of"protecting"the City would be met. You
reiterate this objective in the sentence following, and our response is the some.
2. "It is time that your client's ability to bring poor/untimely workmanship and financial damages to the City,
which is already suffering,comes to an end."
Response: Again,Lopez has been long aware of the City's position that LD's could be imposed as a result of the
delayed completion of the Project. This was the first indication that the City contends it has been damaged by "poor
workmanship". While the Parties clearly have a difference of opinion regarding the causation for delayed completion,
Lopez cannot respond to the poor workmanship allegation as the City has not provided any specific information or
support. Again, informal discussions between the Parties would allow for whatever information the City has in this
regard to be presented and considered. And, once again, with Lopez agreeing to not bid on City projects your stated
objective of bringing this issue "to an end"is met.
3. You premise your potential agreement to table the proposed agenda item on three"concessions" from Lopez:
1
1) "V. Lopez and Sons will not bid on any project sent out for bids by the City of Pismo Beach for a period
of 25 years from the date of the agreement."
Response: Lopez will agree to a reasonable time of abstention fpom considering/bidding on City
projects. Twenty-five years is not reasonable. Federal contractors are subject to FAR regulated debarment
which generally limits the period of abstention to three years. Similarly many municipalities and counties have
"debarment"procedures in place, most of which limit the period to substantially, less than twenty five years,
usually maximized atfuve years. In any event, this, again, is an area where informal discussion could yield an
agreed period of abstention that would satisfy the City's objective.
2) "V. Lopez and Sons will permanently drop all claims against the City of Pismo Beach and will hold the City
harmless against any claims arising out of the project that is the subject of this matter, entering into an appropriate
release agreement."
Response: Lopez previously stated, through my communications, that it was agreeable to this, assuming
the City will provide similar releases.
3) "The total approximate financial loss to the City as a direct result of V. Lopez is$322,500,which
includes additional project management and inspection fees, additional engineering services during construction (ESDC),
additional costs and working days associated with change orders the City was not obligated to issue.This does not
include liquidated damages or City staff time or equipment costs.As part of the agreement,V. Lopez and Sons will remit
50% of this amount back to the City, or$161,250. Alternatively, the City would retain the entire remaining amount of
the retention, $152,574, and V. Lopez would indemnify the City against any potential claims by subcontractors on the
project. As part of this, assessment of liquidated damages would be dropped, and the City would release V. Lopez from
any claims for delay or liquidated damages."
Response: This, again, is the first Lopez became aware of the City's allegation of damages, apart from potential
LD's. Lopez cannot respond to the claim as it has no information regarding what is referred to, the cause of the alleged
damage, or haw it was calculated. You provide two scenarios that the City would accept: Lopez can pay the City
$161,250, or Lopez can forfeit its retention of$152,574 and indemnify the City from any potential subcontractor
claims. You further indicate that this would be in lieu of the City assessing LD's. Without seeing any substantiation for
this proposal Lopez cannot either agree to or reject it. Again, if the Parties engaged in informal resolution discussions the
City could provide whatever support it has for this and, as we promised in prior communication, Lopez will in good faith
consider and respond to the City's presentation. (On November 9, 2020 I wrote to you: "On behalf of my client 1 can
promise a fair and reasoned evaluation of the City's claims once we have the basis and support for those claims identified
and provided. In turn, I would ask that the City reciprocate and reasonably consider the position of my client, and the
support for that position that we can provide.).
From your November 9, 2020 email—
1. " . . . my proposal was not intended as a request to open negotiations. Given the history of the City's relationship
with V. Lopez on the Five Cities Lift Station project, I do not believe that extended discussions or as you put it, "a process
to exchange positions, and information,and then engage in good faith dialogue," will benefit the City."
Response: Depending on how "extended"is defined 1 would agree that neither party would benefit from
dragged out, non-productive, discussions. But to reject any discussion under these circumstances is impractical and not
well reasoned. I seriously doubt you would commit the City to a proposal such as you made to Lopez, without having
been provided any details or support for the demands. You apparently provided a timetable to Lopez to accept your
proposal "as is"within one day, yet we have yet to receive any documentation regarding the City's allegations that
provide the framework for the demands in your proposal. That is, simply, not reasonable. Knowing that this is becoming
akin to a "broken record" I do not see how the City is in any manner harmed by postponing the Council hearing, and
engaging in mutual disclosures and discussion. The City can always determine that the discussions are not bearing fruit
2
and reset the hearing. On the other hand, the real possibility is that the hearing can be avoided and a resolution
reached, or at least the contested issues narrowed.
2. "You and your client have, throughout the pendency of the project, taken an adversarial approach with the City
regarding the delays in the project, and you have repeatedly threatened to pursue the City for compensation for these
delays, all without providing the City any information whatsoever regarding the foundation for such claims."
Response: This assertion is absolutely not true, and is the primary basis for my statement that 1 did not believe
you were completely informed regarding this matter. First the approach taken by Lopez(and since you mentioned it, by
me)has not been adversarial. Lopez has consistently responded to the City's threats of imposing LD's by rejecting
responsibility for the delayed completion of the project and far from not providing support for its position has submitted
numerous RFI's resulting in volumes of change orders and design modifications, all of which consumed inordinate time,
and none of which was the responsibility of Lopez. Only when the City continued to insist that Lopez was solely
responsible for the delays did Lopez become even remotely"adversarial". Even then, Lopez, and I, continued to push the
City for informal resolution of this issue.
For example, in response to Public Works Director Fine's statement to Lopez in October, 2019 that LD's were
going to be assessed Lopez responded by outlining its view on delay causation, and communicating the following:
"In any event,VLS is always committed to providing an exemplary product in as expeditious a manner as the
circumstances reasonably allow. That commitment remains intact regarding this Project, and is not capable of being
made greater by threats of liquidated damages. If the City seriously intends to assess liquidated damages against VLS
please let me know immediately, and we will proceed accordingly. It seems to me that both of our energies and
resources are better spent on assuring the efficient and successful conclusion to the Project than on calculating and
preparing time impact analyses.You indicated in your October 8, 2019 email that you would not provide further written
communication to us regarding this matter, but would be willing to meet. If that is still your position please let me know
when and where we can meet and hopefully put this issue to rest." (October 25, 2019).
Even the "Lopez Notice of Potential Claim"(attached)could hardly be considered"adversarial", again merely advising
the City that it believed, contrary to the City's position, that the delays were caused by others than Lopez, and that much
of the delay would likely be considered "compensable". The City's response, however, coming from its counsel and
emphasizing the impending LD's, can hardly be considered as an avenue to conciliation (also attached).
Due to the City responding through its counsel I became involved. My responses cannot be considered adversarial, and I
have continued the Lopez objective of a less litigious and more informal process of"dispute resolution". For example, in
responding to the February 5, 2020 letter from the City's counsel I stated the rationale for the Lopez Notice of Potential
Claim, and suggested a process of potential resolution:
"Your client's ongoing threats of imposing liquidated damages based solely on the extension of Project duration, and
without acknowledging its role in the delays, left VLS no choice but to formally notify Mr. Fine of its position. In this
regard, and as the Project moves toward completion, it might be useful for the Parties to consider voluntarily invoking
the process contemplated by former Public Contract Code section 9204 (which applies to this contract), and begin to
move toward the "meet and confer", mediation, and possible arbitration of these issues. Please advise me of your
thoughts in this regard."
In a follow up communication on April 16, 2020, 1 again suggested the informal dispute resolution process described in
Public Contract Code section 9204. Then, again, in a June 29, 2020 letter(attached)I urged the Parties to engage in
some process short of litigation to resolve their differences, and indicated a willingness to discuss "any resolution
methodology"the City or its counsel might suggest.
3
When the City made it clear by its final "Working Day Statement"and email communication to Lopez, that it would,
indeed, be imposing LD's, I submitted a claim under section 9204 for the purpose of invoking the less formal and litigious
process I had long suggested to address the LD's, and ultimately, the responsibility for delayed completion. I have never
had a response from the City to any suggestion of informal resolution attempts, nor a response to the section 9204
claim. I believe that your claim of Lopez and me being "adversarial"in this matter is demonstrably inaccurate, and not a
reasonable basis for the City to decline Lopez'request to postpone the Council hearing and engage in informal
discussions.
3. "If your client does wish to accept the settlement proposal I previously sent, please communicate directly with
the City Attorney, Dave Fleishman, who is copied here."
Response: My client does wish to enter into an agreement with the City, and has already stated it would agree
to refrain from City projects, and refrain from pursuing claims against the City. However, it cannot; given the complete
lack of support provided, simply agree to your proposal. Your"take it or else"approach is not constructive and
demonstrates a willingness to leverage a public airing of the City's claims against my client against Lopez. You are well
aware that even the public posting of an agenda item predicated upon a "staff recommendation"to disqualify Lopez
from future City projects will have a significantly deleterious impact on Lopez. The especially troubling part of this is that
result will occur regardless of the true facts.
Conclusion—
I understand that you are, as you stated, busy in these days after the election, and I apologize for the length of this
correspondence. However, it was the City that set the date, and provided the short time frame in which to
respond. And, I wanted to be sure that, prior to the response deadline you imposed, you were aware of some of the
background, as provided above and in the attachments. Based upon this, and our prior correspondence, I again request
the following:
1. The City remove (or not place)the Council hearing regarding Lopez on agenda for November 17, 2020, and
instead postpone the hearing to a date to be determined, if it is necessary;
2. That the City suggest a process under which the Parties can exchange positions, and support for those positions,
and then meet and discuss the relative merits of the positions and their evidentiary support;
3. That the City, in light of this exchange of information and discussion,work with Lopez in a good faith effort to
resolve all, or as many issues,that exist between them; and,
4. That the substance of this information and discussion will remain confidential between the Parties during the
process.
Lopez is agreeable to any reasonable schedule for this to occur, and will agree that during the duration of the process it
will forebear from bidding on any City project,and will further forebear from pursuing any affirmative claim against the
City.
Either party can terminate the process at any time and such termination, or the fact that the process occurred, shall
have any restrictive impact on either party's rights to pursue any Council hearing, or claims, or other remedy that either
party believes it may have. I am hopeful that both Parties would exercise any termination with caution and reason.
Please advise me of the City's response to this as soon as practical.
Thank you,
Scott Baker
4
Vince Lopez Jr
From: Scott Baker <sr-baker@pacbell.net>
Sent: Thursday, November 12, 2020 12:15 PM
To: James R. Lewis; David M. Fleishman
Cc: Vince Lopez III; Butch Lopez
Subject: V Lopez
Gentlemen,
I just spoke briefly with my client. Given the time constraints imposed by the City I will not address the draft
staff report's contents, and instead cut to the chase. Suffice to say, my client and I do not agree with the staff
report, and certainly do not agree that the City has been damaged by my client.
That being said, my client has authorized me to convey the following non-negotiable offer:
1. The City may retain$69,000 from the retention moneys currently withheld, and this is not to be considered
an admission of any liability or responsibility for the delay in project completion;
2. V. Lopez & Sons will not bid on or participate in any City owned project for a period of five years;
3. V. Lopez & Sons will not pursue any claims against the City related to this project;
4. The Parties will execute an agreement that includes mutual general releases of liability;
5. The City will immediately remove any and all references to the proposed Agenda item and will not further
post or publish anything related thereto; and,
6. The terms of this resolution will be confidential.
Please note that until last Friday afternoon my client understood only that the City was imposing liquidated
damages in the amount of$69,000 against V. Lopez Jr. & Sons, which my client continues to firmly believe is
not justified. The manner in which the City has leveraged the public hearing is not well taken, and my client's
offer should not be viewed as any admission of liability to the City, but rather is made based solely upon the
business ramifications of the City's course of action, and the expense and time impact of protracted litigation.
Please respond immediately to this offer, as required by the exigent timeframe upon which the City has insisted.
Thank you,
Scott Baker
i
Vince Lopez Jr
From: Scott Baker <sr-baker@pacbell.net>
Sent: Thursday, November 12, 2020 2:34 PM
To: Vince III
Subject: Fwd: V Lopez
Let me know
Sent from my iPhone
Begin forwarded message:
From: "David M. Fleishman" <DFleishman@rwglaw.com>
Date: November 12, 2020 at 2:31:48 PM PST
To:Scott Baker<sr-baker@pacbell.net>
Cc: "lames R. Lewis" <JLewis@pismobeach.org>
Subject: Re: V Lopez
Scott,
If the offer is non-negotiable, I have been directed to let you know the offer is rejected.
While your client may feel it is in the right,from a purely business standpoint, your client stands to lose
a lot more than the $69,000 you have offered here. This is money that the City Council already directed
to be withheld from the retention as part of the notice of completion that was approved by the Council
more than a month ago. Worse,though, is the fact that the City will be pursuing V. Lopez for the full
measure of its damages in connection with the delays in the project caused by your client, which will
certainly exceed the amount in the retention after the liquidated damages are deducted.
The City's offer was one of compromise, not "extortion" as your client put it. And if your client doesn't
have a change of heart in pursuing a litigation strategy, I suspect there will be significantly greater
expense to your client, not only from the litigation, but also from defending against the treble damages
that I have alluded to in the past under the False Claims Act. Those are claims the City will pursue,either
affirmatively in its own lawsuit, or in a cross-complaint should your client file suit against the City. Your
client is already being sued for such false claims by another public agency.
The settlement proposal was a way out of all that, and unless your client has a change of heart in the
next half hour or so, they will have no one to blame for themselves to any adverse impact to their
business. They have a way out, and while they may think it unfair,the City is offering a significant
discount on its own damages to avoid litigation and to allow the parties to go their separate ways. It is
truly unfortunate your client can't see the business sense of resolving the matter.
Dave Fleishman
Of Counsel
[cid:OF5B3 E313FE74EDC8173672FEA1DD3D4]
RICHARDS WATSON GERSHON
847 Monterey Street,Suite 206
1
San Luis Obispo, CA 93401
T: 213.626.8484
D: 805.706.0962
F: 213.626.0078
W: rwglaw.com<http://rwglaw.com>
This email may contain material that is confidential, privileged and/or attorney work product for the sole
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express permission is strictly prohibited. If you are not the intended recipient, please contact the sender
and delete all copies.
On Nov 12, 2020,at 12:14 PM,Scott Baker<sr-baker@pacbell.net<mailto:sr-baker@pacbell.net>>
wrote:
Gentlemen,
I just spoke briefly with my client. Given the time constraints imposed by the City I will not address the
draft staff report's contents, and instead cut to the chase. Suffice to say, my client and I do not agree
with the staff report, and certainly do not agree that the City has been damaged by my client.
That being said, my client has authorized me to convey the following non-negotiable offer:
1. The City may retain $69,000 from the retention moneys currently withheld, and this is not to be
considered an admission of any liability or responsibility for the delay in project completion;
2. V. Lopez&Sons will not bid on or participate in any City owned project for a period of five years;
3. V. Lopez&Sons will not pursue any claims against the City related to this project;
4. The Parties will execute an agreement that includes mutual general releases of liability;
5. The City will immediately remove any and all references to the proposed Agenda item and will not
further post or publish anything related thereto; and,
6. The terms of this resolution will be confidential.
Please note that until last Friday afternoon my client understood only that the City was imposing
liquidated damages in the amount of$69,000 against V. Lopez Jr. &Sons,which my client continues to
firmly believe is notjustified. The manner in which the City has leveraged the public hearing is not well
taken, and my client's offer should not be viewed as any admission of liability to the City, but rather is
made based solely upon the business ramifications of the City's course of action,and the expense and
time impact of protracted litigation.
Please respond immediately to this offer, as required by the exigent timeframe upon which the City has
insisted.
Thank you,
Scott Baker
Click
here<https://www.mailcontrol.com/sr/d DO2JwBjeGPGX2PQPOmvUvmldA89nuwlzPK_yH65Srq E7EQAXI
3rvM7gxnDhhUKm9Olm59GzsgWzbAWAmKJQAw==>to report this email as spam.
2
V.LOPEZ JR&SONS
GENERAL
ENGINNERING
CONTRACTORS,INC.
P.O BOX 488
SANTA MARIA,CA 934%
LIC#607333 A
November 16,2020
Attn: Mayor and City Council
Pismo Beach Response to Council Agenda
Spyglass Park Excavation:
We excavated to verify piping sizes for the planned tie-in. The City made the decision the move the
required by-pass, as was shown on the plans. This extended the excavation and footprint in the area.
The area was fenced and the public had access to the park for use. There was no reason the City could
not rent out the portion of the park outside of our work area. Children still used the playground equipment
and the public crossed the park daily. There was no public safety issue as our area was fenced and
spoils covered. When reviewing the plans for this site piping details were not clear and we needed time
to determine the course of construction.
City Vactor Truck/By-Passing:
There were times we did use the City vactor truck and advised City staff that we were more than willing
pay for their time if required. Lack of planning by the engineer/City on their system operation resulted in
us having to design some operations as conditions changed in the field. During any by-pass operations
we provided two pumps, a primary and backup. I do not recall when there was an overflow condition
that required City intervention. We had`Rain for Rent'on site at all times during by-pass operations. At
Sunset Palisades the engineer/City did not have in their plan to shut off he discharge piping,requiring an
installation of a valve to control this line. Also the fittings required at the site had to be redesigned as
space limitations was not as planned on design drawings.
Five Cities Vault:
We did need to core a hole in the vault. Where the plans give a detail on D-103 for the penetration this
could not be installed as shown. This is not a sump but a drain box into the wet well. The box and grate
are taller than the bottom thickness of the floor of the vault so room was needed to properly seal the box.
To set the box and grate we had to core the bottom which we did. The installation drains as required.
Issue 2-Interpretation of duplex pump stations:
While there are always two pumps to these lift stations. Details on sheet C-101, maintenance project,
indicate one run as needing the work. Plans should have shown the two parallel runs as needing the
work. When I contacted our supplier and asked him to interpret the detail shown he stated it looked to
him to be one run only.
• Page 2 November 16, 2020
Pump Elbow Flange Installation Five Cities Lift:
Plans indicated ductile iron pipe on the vertical outlet piping for the pumps. Pump shoes provided by
manufacture were semi-steel six-inch raised face flanges. Industry standard is 125 Cl flat face flanges
are not bolted to raised face flanges due to the potential of cracking of the 125 flat face flange. This is
industry standard for water, sewer and gas installations. I would not knowingly mate these materials due
to the potential for failure. The engineer,Josh Reynolds,was aware of the issue and concerns. The City
changed the vertical outlet piping to stainless steel and thus resolved this issue.
From my perspective the project was poorly planned and required the contractors, us and our subs, to
make design changes as we went.
Doug Terry
TEL 805-928-1198
FAX 805-928-8262
Lic#607333 A
Certs: SDVBE/DBE/MBE/SBE
SINCE 1979
Exhibit 2
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
MTI
Moreland Thompson, Inc.
Electrical Contractor - Lic#C-10 859737 - CA Small Business# 1170221 - DIR# 1000003937
PO Box 2717 Orcutt CA 93457 phone 805.925.2271 fax 805.925.2277
11/26/2020
RE: Agenda Item 113, Declaration of Non-Responsible Bidder: V. Lopez Jr. & Sons, Inc.
To Whom It May Concern:
This is written in response to Fact Supporting Declaration paragraph Lack of Understanding of
PG&F. Standards, pages 11.13-5 and 11.13-6.
The City states that the materials originally ordered were for residential applications, this is
incorrect. The 225A meter/main originally ordered was 3 phase with test block bypass, this
is a commercial meter, see attached. This will show that the meter panel is EUSERC listed.
EUSERC is an acronym for Electric Utility Service Equipment Requirements Committee.
Formed in 1983, the purpose of the organization is to promote uniform electric service
requirements among the member utilities, publish existing utility service requirements for
electric service equipment and provide direction for development of future metering
technology. There are approximately 80 utilities involved in EUSERC from 12
states. Additionally, we submitted cut sheets for these materials and they were returned from
the engineer with no comments. Materials were procured well before we actually began
construction.
After the project started the City issued a change order to install the PG&E service
conductors from overhead to underground across HWY 1. This change included installing
one 5" conduit for PG&E vs. 2 - 3" as shown on the plans. There was no updated drawing
or conduit and wire schedule provided from the engineer.
Once we started installation on the 5 Cities Lift Station we realized the conduit was too large to be
installed to the meter that we had ordered. This prompted us to turn in an RFI regarding the service
and led to procurement of new materials including a 400A disconnect, CT cabinet and underground
pull section.
The City also states that there was a refusal to work. We never stopped installation of the conduit
and other materials while the service equipment issue was being resolved.
MTI
Moreland Thompson, Inc.
Electrical Contractor - Lic#C-10 859737 - CA Small Business# 1170221 - DIR# 1000003937
PO Box 2717 Orcutt CA 93457 phone 805.925.2271 fax 805.925.2277
Lack of information on the design drawings and material submittal review were the contributing
factors to any delays as relates to this specific issue.
Additional design issues also impacted the schedule. The common enclosure as shown on the design
drawing was insufficient in size to accommodate the equipment needed. The submittal process for
this enclosure took 5 months alone before we were able to finally place the order to have it built.
This may have been avoided if the design drawings more accurately reflected the equipment to be
installed. Final approval was needed in order to complete the conduit runs and insure they were
installed in the proper locations based on the layout, that the concrete pad was of sufficient size, etc.
I believe that the electrical installation would have gone more efficiently if there had not been issues
encountered such as these.
Since
I
Justin Thompson
Vice President / Treasurer
Moreland Thompson, Inc.
Exhibit 3
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
V. Lopez Jr. & Sons
General Engineering Contractors
Since 1979
RFI Loy
Project: Five Cities Lift Station
SE-Subject Submitted On Replied On
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V. Lopez Jr. & Sons
General Engineering Contractors
Since 1979
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Project: Five Cities Lift Station
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V. Lopez Jr. & Sons
General Engineering Contractors
Since 1979
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Project: Five Cities Maintenance and Repair Project
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Exhibit 4
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
V. Lopez Jr. & Sons
General Engineering Contractors
Since 1979
Contract Change Order (CCO) Loq
Project: City of Pismo Beach 5 Cities Lift Station, Force Main &
Maintenance Projects
Number& Subject Received On Accepted On All Si natures On Notes
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General Engineering Contractors
Since 1979
Contract Change Order (CCO) Log
Project: City of Pismo Beach 5 Cities Lift Station, Force Main &
Maintenance Projects
Number& Subject Received On Accepted On All Si natures On Notes
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V. Lopez Jr. & Sons
General Engineering Contractors
Since 1979
Contract Change Order (CCO) Loq
Project: City of Pismo Beach 5 Cities Lift Station, Force Main &
Maintenance Projects
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Exhibit 5
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
FIVE CITIES LIFT STATION SUBMITTAL DELAYS
SUBMITTAL NO. &SCOPE DATE SUBMITTED RESPONSE DATE
1 Electrical Hazard Areas 2/12/2018 5/25/2018
2 600V Wires Cable 2/12/2018 5/25/2018
3 Low Voltage 2/12/2018 5/25/2018
4 Electrical Hangers/Supports 2/12/2018 6/26/2018
5 Conduits 2/12/2018 6/26/2018
6 Electrical Boxes 2/12/2018 5/25/2018
7 Electrical Duct Bank 2/12/2018 5/25/2018
8 Electrical Identification 2/12/2018 5/25/2018
9 Panel Boards 2/12/2018,4/24/18 8/8/2018
10 lWiring Devices 2/12/2018 3/14/2018
11 Lighting 2/2/2018 3/14/2018
CHANGE ORDER APPROVAL DELAYS
C.O.# SCOPE DATE SUBMITTED RESPONSE DATE
4 90 Degree Elbow in Drywall 5/16/18, 5/31/18, 6/1/18 6/27/2018
5 Precast M/Tto Polymer 6/15/2018 7/13/2018
6 Pothole Forcemaing Hwy 1 7/2/2018 8/10/2018
8 Additional Excavation & Backfill 7/2/2018 9/10/2018
9 Additional Drop Bowl Corrilitos 6/15/2018 9/20/2018
10 Insertavalve 8/21/2018 9/20/2018
11 Traffic Loops 9/18/2018 10/30/2018
12 Bollards &AirVac 12/19/2018 1/29/2019
13 Hot Tap 12' Main for AirVac 12/21/2018 1/29/2019
15 Waterstop at Drain Box 3/26/2019 4/11/2019
16 SS Piping Installation of DI 4/16/2019 5/16/2019
17 SS Palisades New Vault 5/14/2019 6/14/2019
20 jPave Additional Spyglass 5/14/2019 7/2/2019
21 400 Amp 1240V Cabinet 7/10/2019 7/22/2019
)TAILry&lh�- Lo� Z��It) 12C1n/l`7
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RFI Delays - Five Cities Lift Station
RFI NO. SCOPE DATE SUBMITTED RESPONSE DATE
17 Concrete Headwall 2/11/2018 4/16/2018
18 6" Discharge Plan 3/12/2018 3/29/2018
19 Discharge Plan 3/14/2018 4/29/2018
23 Tie In Sequence 5/29/2018 6/21/2018
RFI DELAYS - MAINTENANCE PROJECT
RFI NO. SCOPE DATE SUBMITTED RESPONSE DATE
15 Door Frames Spyglass Bldg 5/30/2018 7/17/2018
18 Roof Connection 8/14/2018 8/31/2018
19 Roof Connection 8/15/2018 9/4/2018
FIVE CITIES MAINTENANCE SUBMITTAL DELAYS
SUBMITTAL NO. & SCOPE DATE SUBMITTED RESPONSE DATE
1 Low Voltage 2/12/2018 5/5/2018
2 Grounding 2/12/2018 5/15/2018
3 Raceways/Boxes 2/12/2018 5/15/2018
4 Identification Of Electrcal Devices 2/12/2018 3/11/2018
5 Panel Boards 2/12/2018 3/11/2018
6 Wiring Devices 2/12/2018 3/11/2018
Exhibit 6
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
Vince Lopez Jr
From: Chad Stoehr <CStoehr@PismoBeach.org>
Sent: Monday,July 15, 2019 11:29 AM
To: Vince Lopez Jr
Cc: Butch Lopez; doug@vlopezjrandsons.com;Adam Rianda;Joshua Reynolds; Russell
Fleming
Subject: RE: Executed contract from the City of Pismo Beach
Vince,
I am fine with additional days and I am aware of what Spider indicated, but at this point we really don't know whether it
is going to be 8 weeks, 10 weeks, or 12 weeks. It could be even longer than that.
What you have requested is acceptable, 20 days with a note that additional days may be required based on PGE. 20
days will take you out to end of September, at that time, I expect you should know more from PGE and be keeping
myself and WSC updated over the next couple months at our bi-weekly meetings, and as we approach that time we will
have a discussion to add more days based on what we know.
Thanks
Chad
From:Vince Lopez Jr [mailto:Vince@VLopezlrand5ons.com]
Sent: Monday,July 15, 2019 5:51 AM
To:Chad Stoehr<CStoehr@ Pismo Beach.org>
Cc: Butch Lopez<Butch@vlopezjrandsons.com>; doug@vlopezjrandsons.com
Subject: RE: Executed contract from the City of Pismo Beach
Chad, at the meeting Spider said PGE was 10 weeks out after panel was installed and I thought you said you were fine
with the additional days.This doesn't reflect the time for PGE?
Vince Lopez III
President
V.Lopez Jr and Sons, Inc
Since 1979
805-928-1198 TEL
805-928-8262 Fax
805-928-1179 Sales Dept
CONFIDENTIALITY NOTICE:
This e-mail and any attachments contain information from Lopez & Sons, Inc., and are intended solely for the
use of the named recipient or recipients. This e-mail may contain privileged communications or work product.
Any dissemination of this e-mail by anyone other than an intended recipient is strictly prohibited. If you are not
a named recipient, you are prohibited from any further viewing of the e-mail or any attachments or from making
any use of the e-mail or attachments. If you believe you have received this e-mail in error, notify the sender
immediately and permanently delete the e-mail, any attachments, and any copies thereof from any drives or
storage media and destroy all printouts of the e-mail or attachments.
t
Exhibit 7
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
GAT Y
ASS L� Project: Five Cities LS and LS Maintenance
�0 113 Other ID
Weekly Statement of Working Days Report Number 127
To: V. Lopez Junior&Sons
The following is a statement of working days charged to your contract for the week ending on: 7/3/20
Date Day Weather or Other Conditions Working Day Non Working Day
Jun-29-20 Mon no work, project considered substantially complete
Jun-30-20 Tue no work, project considered substantially complete
Jul-01-20 Wed no work, project considered substantially complete
Jul-02-20 Thurs no work, project considered substantially complete
Jul-03-20 Fri no work, project considered substantially complete
Days this report 0 0
Days previously reported 528 66
Total days to date 528 66
Time Extensions I Number of Days
Days this report 4
Days previously reported 155
Total days to date 159
Computation of Extended Date For Completion Number of Days Date
1. First working day of contract 2/2/2018
2. Working days specified in contract 300
3. Number of holidays or other nonworking days specified in contract 12
4. Computed date of completion 4/15/2019
5. Total approved time extension days(Change Orders+Non Working Day) 159
5b. Number of additional holidays due to contract extension 16
6. Revised working days for contract(line 2 plus line 5) 459
19.
Extended date of completion 3/17/2020
Total working days to date 528
Working days remaining -69
Controlling Operation(s):
Comments: Extended date of completion has been exceeded.
Project is considered substantially complete on Monday June 22,2020. Working Day Statement#127 issued to capture
additional working days provided as part of Contract Change Orders 30 through 33(4 days), reflect September 3,2018
(Labor Day) which should have been logged as "n/a"under Working Day, not as a Non-Working Day and May 25, 2020
(Memorial Day) which should have been logged as "n/a"under Working Day, not as a Working Day
The Contractor will be allowed fifteen (15)calendar days in which to
protest in writing the correctness of this statement; otherwise the /
statement shall be deemed to have been accepted by the Contractor as
correct. Line 7"Extended date of completion" is the end date for this City Representative
project.
W:\3.0 Projects\PB-City of Pismo Beach\Five Cities Lift Station -CM\9.0 Construction\9.1 Document Logs\Working Days
Statements\Project Working Days_FCLS_V.2 Printed 9/8/2020
Exhibit 8
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
++ 110 S. Mary Avenue, Suite 2-252
Scott R. Baker, Lawyer Nipo s05-704-8373o, California 93444
sr-baker@pacbell.net
September 11, 2020
Via Electronic Mail: dfleishman@rwglaw.com
David M. Fleishman, Esq.
RWG Law
847 Monterey Street, Suite 206
San Luis Obispo, CA
Re: Five Cities Drive Lift Station Maintenance Project:
1. Protest of Weekly Statement of Working Days;
2. Notice of Claim Pursuant to Public Contract Code§9204
Dear Mr. Fleishman:
As indicated, above, the purpose of this correspondence is two-fold: First, to serve as a
formal reiteration of V. Lopez Jr. & Sons' ("VLS")protest of the Weekly Statement of Working
Days,Number 127, provided to VLS on September 8, 2020; and, second, to serve as a formal
notice of claim by VLS under Public Contract Code §9204 and §7102.
1. Protest of Weekly Statement of Working Days:
On September 8, 2020, Michael Goymerac, as the "City Representative", forwarded
Weekly Statement of Working Days, Report Number 127, to VLS via electronic mail. In the
email which attached the working days statement Mr. Gormerac indicated that it was anticipated
that statement number 127 would"be the final working day statement for the project." A copy of
the email transmission and the attached working days statement are included as part of this
correspondence.
The working days statement indicated that adjustments had been made to the previous
statement(Number 126) and the final determination by the City was that the working days had
exceeded the extended completion date for the project by 69 days. The working days statement
further stated that"Contractor will be allowed fifteen (15) calendar days in which to protest in
writing the correctness of this statement; otherwise the statement shall be deemed to have been
accepted by the Contractor as correct." On September 9, 2020, by electronic mail, VLS advised
the City that it did not agree with working days statement. VLS thus complied with the City's
attempt to unilaterally limit the time for any VLS protest, and provides this correspondence as
further"timely"protest, with greater explanation of the VLS position.
VLS agrees that the Project was unduly delayed, as discussed further in part 2,below. The
vast majority of the delays are excusable, and most are compensable to VLS, having arisen from:
deficiencies in the City's contract documents, including its plan drawings and specifications,
resulting in numerous changes to the "as planned" construction; the inability of PG&E to timely
perform tasks critical to the construction; and the City's failure to timely provide responses to
RFI's and submittals and provide timely access to VLS to perform anticipated and scheduled
work. VLS repeatedly advised the City that deficient plans and issues with other City contractors
were causing inordinate delays to the completion of the Project, and creating significant adverse
impacts on VLS. Those issues continued throughout the Project, even through startup. The
Project, many times, came to a complete standstill as engineering errors or omissions were
discovered and redesign accomplished. VLS and its subcontractors were idled awaiting critical
preconditions to be accomplished by ProUsys, PG&E, and others. The City,without valid
justification, consistently rejected VLS' assertion that the scope of ProUsys and PG&E work was
critical path. VLS' position in this regard was consistently validated when the Project essentially
ground to a halt while awaiting these issues to be resolved and the work required by others
accomplished. These conditions, and the delays that resulted, were not reasonable, nor were they
within the contemplation or expectations of VLS when it submitted its bid, and, thereafter, when it
entered into the Project contract.
Simply, working days statement number 127 fails to take into account the scope and
impact of the delays caused by the City, PG&E, and the City's contractors other than VLS.
Because the working days is not accurate, and because of the City's stated intent to impose
liquidated damages on VLS, this protest is required.
2. Notice of Claim Pursuant to Public Contract Code§9204:
In June, 2020, VLS directly asked the City whether, in light of the foregoing the City
intended to impose liquidated damages (by contract, $1,000 per day). The City, by Chad Stoehr,
responded on June 25, 2020: "The City still plans on withholding liquidated damages and we are
considering substantial completion of the project as of Monday, June 22, 2020. Coupled with the
City describing working days statement number 127 as the "final" City position on VLS working
days, an actionable claim under Public Contract Code §9204 has arisen(PCC §9204 is repealed by
its own language effective January 1, 2020, but is applicable to contracts, including this Contract,
made between January 1, 2017 and the date of repeal).
Subsection(c)(1)(A) of PCC §9204 indicates a"Claim" includes a"demand by a
contractor ... for relief from damages or penalties for delay assessed by a public entity under a
contract for a public works project."
Based upon the statements of the City, and working days statement number 127, the City is
withholding $69,000 from payment to VLS as liquidated damages. For the reasons stated in part
1, above, the calculation of working days by the City is erroneous. The 69 days being charged to
VLS by the City are, actually,part of significantly greater delay, all of which is,with respect to
VLS, excusable or compensable. Thus, rather than being liable for liquidated damages VLS is
owed compensation for delays caused by the City. VLS' affirmative claim in this regard will be
presented to the City in a separate claim.
With respect to the present"disputed liquidated damages" claim,VLS requests that the
City reasonably recognize the role that it, its contractors such as ProUsys, and others such as
PG&E, played in the delayed completion of the Project. For instance, the City was exceptionally
dilatory in responding to VLS RFI's, submittals, and change orders. Critical VLS RFI's were
2 1 P a g e
responded to by the City weeks and even months following submittal. It took the City generally
two to three months to respond to VLS submittals,with some reaching more than four months.
Even agreed upon change orders were not processed by the City for one to three months after
submittal by VLS. Attached to this letter are charts exemplifying these delays.
There is simply no justification for imposing any liquidated damages on VLS. VLS
requests that the City provide justification for its position, and especially provide evidence as to
how the myriad delays for which it was the cause, or were caused or contributed by those other
than VLS, were considered in reaching its position.
Very truly yours,
Scott R. Baker
31Page
Exhibit 9
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
110 S.Mary Avenue, Suite 2-252
Scott R. Baker, Lawyer Nipomo,California 93444
Phone: 805-704-8373
E-Mail:sr-baker@pacbell.net
November 6, 2020
Via Electronic Mail: dfleishman@rwglaw.com
David M. Fleishman, Esq.
RWG Law
847 Monterey Street, Suite 206
San Luis Obispo, CA
Re: Five Cities Drive Lift Station Maintenance Project
Dear Mr. Fleishman:
I am writing on behalf of V. Lopez Jr. & Sons relative to the referenced Project and an email
received by my client yesterday,November 5, 2020. Attached to the City's email is a"Public Hearing
Notice" announcing the City's intent to hold a public City Council meeting on November 17, 2020 for
the purpose of considering City Staff's recommendation that my client be deemed a"non-responsible
bidder" and disqualified from performing future work for the City (enclosed). Although neither the
email nor the attached notice make reference to the Project, I am assuming that the email and the notice
arise from my client's work on the Project. Because I know you represent the City regarding the issues
between the City and my client related to the Project, I am directing this letter to you, but request that
you immediately convey its contents to the appropriate City personnel. Also, I ask that you immediately
forward to me, electronically if possible, all reports and supporting documentation generated by the City
or its consultants that relate to the City Staff s recommendation.
My client and I are surprised and disappointed at the City's stated intent to bring this matter
before the Council and the public. We consider the Staffs recommendation to be unwarranted and
punitive. The apparent rancor and adversariness demonstrated by the City regarding what should be
resolvable contract issues is truly baffling. For more than a year my client and/or I have attempted to
address the parties' conflicting delay claims in an amicable and efficient manner. Following your
February 5, 2020 letter to my client I have communicated to you, on no less than three occasions,
suggestions that our clients engage in some form of meaningful dispute resolution and avoid an
adversarial approach to these issues. Neither the City nor you ever responded to these proposals, but
have consistently taken the opposite approach, including imposing liquidated damages, and threatening
(through your office)pursuit of a False Claims Act action and insinuating my client engages in efforts to
defraud public entities. I am flummoxed by this type of response and wonder if there is some genesis
for it of which I am not aware. If so,please educate me so we are all dealing from the same informed
perspective.
The intent of the City to bring its contrived version of my client's performance on the Project to
public attention is wrongful, and can be viewed only as an irresponsible and probably actionable attempt
to damage my client and its reputation. Therefore, consider this our request that the City cease and
desist from this course of action, and revoke its Notice of Public Hearing. As we have stated and
requested for months, my client will gladly participate in private conversations aimed at understanding
each sides' positions and working toward a non-litigious resolution. Given the inexplicable animosity
that apparently drives the City's conduct relative to my client, we would also consider entering into
some type of agreement to not bid on City projects for a specified period of time as part of the overall
reconciliation of this matter.
According to the email from the City enclosing the Notice of Public Hearing, the notice and
agenda will be posted on November 12, 2020. My client and I request that this action not be taken, and
that, as stated above, the Notice be revoked. If the City proceeds on its present course significant and
unwarranted damage to my client will be the natural and inevitable result. My client cannot and will not
tolerate such an occurrence. Please notify the City of our position and also reiterate my client's
continued preference and willingness to privately and informally meet to address the issues. Please also
provide a response as soon as possible, but not later than November 12, 2020.
Very truly yours,
Scott R. Baker
cc Vince Lopez III
2
Exhibit 10
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
From: James Lewis <JLewis(a)PismoBeach.orq<mailto:JLewis(cDPismoBeach.orq>>
Subject: RE: Five Cities Lift Station
Date: November 6, 2020 at 1:30:44 PM PST
To: "Fleishman, Dave" <dfleishman(a�_rwglaw.com<mailto:dfleishman(aD_rwglaw.com>>
Cc: Benjamin Fine <BFine(o-)_PismoBeach.orq<mai Ito:BFine(a)PismoBeach.org>>, James Lewis
<JLewis(a�_PismoBeach.orq<mailto:JLewis(aD_PismoBeach.org>>
Dave-
am in receipt of and have reviewed Mr. Baker's correspondence of November 6. While I am absolutely
confident to move forward I am interested in his offer of an agreement that his client would not bid for
work with the city for a period of years. Please forward the following response to him:
Mr. Baker-
Our City Attorney, Dave Fleishman, has forwarded to me a letter from you dated November 6, 2020. In
this letter you state your client would be open to an agreement that would state they would not bid on city
projects for a period of years. I'm open to discussing an agreement like this with a few other caveats that
are most important to the City. Let me be clear, however, that we plan to move ahead with the hearing on
November 17. The challenges we dealt with and the costs we incurred have caused significant damage
to the City and I believe it is incumbent on us to protect the City so it doesn't suffer the same
consequences on future City projects. I am aware of your litigation in Grover Beach, and our action will
be a reasonable and measured one that must be taken to protect our City in the future from the setbacks
and financial damages suffered by Pismo Beach on this project. It is time that your client's ability to bring
poor/untimely workmanship and financial damages to the City, which is already suffering, comes to an
end.
This said, I would consider removing the item indefinitely for an agreement that states:
1)V. Lopez and Sons will not bid on any project sent out for bids by the City of Pismo Beach for a period
of 25 years from the date of the agreement.
2)V. Lopez and Sons will permanently drop all claims against the City of Pismo Beach and will hold the
City harmless against any claims arising out of the project that is the subject of this matter, entering into
an appropriate release agreement.
3)The total approximate financial loss to the City as a direct result of V. Lopez is $322,500, which
includes additional project management and inspection fees, additional engineering services during
construction (ESDC), additional costs and working days associated with change orders the City was not
obligated to issue. This does not include liquidated damages or City staff time or equipment costs. As
part of the agreement, V. Lopez and Sons will remit 50% of this amount back to the City, or
$161,250. Alternatively, the City would retain the entire remaining amount of the retention, $152,574, and
V. Lopez would indemnify the City against any potential claims by subcontractors on the project. As part
of this, assessment of liquidated damages would be dropped, and the City would release V. Lopez from
any claims for delay or liquidated damages.
Please let me know of your decision by Tuesday, November 10th at 5 pm. I cannot make changes to the
agenda after this date.
Sincerely,
Jim Lewis
City Manager
Regards,
Jim
James R. Lewis
City Manager
City of Pismo Beach, CA
"Classic California"
805-773-7003
www.pismobeach.org<http://www.pismobeach.org/>
Exhibit 11
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
Via Electronic Mail
James R. Lewis, City Manager
JLewis(@-PismoBeach.org
City of Pismo Beach
Re: Five Cities Lift Station/V. Lopez Jr. & Sons
Dear Mr. Lewis:
David Fleishman forwarded me your response to my letter of November 6, 2020 regarding the referenced
matter and the City's Notice of Public Hearing ("Notice") related to my client, V. Lopez& Sons. (Again,
thanks to Mr. Fleishman for promptly forwarding my letter to you and your response to me).
My client's President was traveling out of the area when the City's Notice was sent last Thursday
afternoon (November 5, 2020 at 4:21 p.m.). He will, again, be traveling back to the area today
(November 9, 2020) and will not be available for communication until at least late afternoon. He has
authorized me to communicate with you regarding this matter and negotiate at least a place holding
agreement that will allow the issues raised by your letter to me to be addressed fully and fairly.
First let me indicate that my client and I consistently have attempted to understand and resolve the issues
in an amicable and businesslike manner. Do not take my silence on some of the"editorial" statements
made in your letter as any sort of agreement by either my client or me as to accuracy or legitimacy of
those statements. Rather, I would like to focus on moving toward a reasonable and efficient
resolution. Unfortunately, my client and I are approaching this situation with a significant
disadvantage: We do not know the basis of the City's current position. Previously, we understood that
the parties have divergent views on the causes and impacts of the delays associated with the
Project. This is something that I hoped could be discussed and resolved short of adversarial
proceedings. Then, for the first time this past Thursday afternoon, the City advised my client that it
considered Lopez & Sons "non responsible" and would seek the City Council's imprimatur on that
opinion. The repercussions to my client from such a determination are obvious and serious. Then, in
your Friday response to me, you indicate that the City further believes my client to have caused more
than $320,000 damage to the City. Again, this is the first we have heard such a claim from the City, and
there is scant support for this position provided in your response.
One thing appears clear, however. The City and my client seem to hold significantly distinct views of this
Project, the problems and delays associated with it, and of course, the reason for those issues. As I
stated in my letter forwarded to you on Friday, I do not believe the City is warranted in publicly airing its
position regarding my client, especially in light of the City's tacit rejection of our requests to engage in
informal "meet and confer" options as dictated by the Public Contract Code, and frankly, by common
sense. I am greatly concerned that this matter has reached this "critical mass" point due to misconception
or lack of understanding by one or both of the parties. I think a less draconian approach is, considering
the impact that the City's proposed course of action will have, at least worth some appreciable effort.
Your response states that the City's interest is to"protect the City so it doesn't suffer the same
consequences on future City projects. " That objective is met by my client's offer to bind itself to
abstaining from bidding on any City project for a specified period of time —certainly for as long as it takes
for the remaining issues to be analyzed, discussed, and resolved in one manner or another. During this
time, assuming that the City will agree to engaging in some process that will allow the exchange of
information, and civil discourse regarding our positions as to what that information suggests, my client will
also refrain from pursuing any claims against the City.
The foregoing would allow the parties to each better understand the other's viewpoint, the basis for that
viewpoint, and determine whether a potential for less adversarial resolution exists. One thing I have
learned in more than forty years of practice is that disputes are rarely"black and white" and that they
often spiral out of control, unnecessarily, because of a lack of full disclosure of the basis for the
competing positions, and an opportunity to fully understand those positions in light of the information that
is actually available. I am concerned that this situation is heading in that direction, but hopeful that such a
result can be avoided by proceeding as suggested above, or in some other manner that avoids the "cliff'
presented by the City's current course of action.
On behalf of my client I can promise a fair and reasoned evaluation of the City's claims once we have the
basis and support for those claims identified and provided. In turn, I would ask that the City reciprocate
and reasonably consider the position of my client, and the support for that position that we can
provide. During this effort, I propose that the Notice be revoked, tabled or not issued; that V. Lopez &
Sons refrain from any City project bids and also refrain from pursuing any claims against the City; and,
that the parties agree to a process to exchange positions, and information, and then engage in good faith
dialogue in an attempt to resolve, or at least narrow, the division between them.
Please let me know the City's position as soon as possible so that I can advise my client, and we can
respond accordingly.
Very truly yours,
Scott R. Baker
Exhibit 12
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
James Lewis <jlewis@pismobeach.org>
To:Scott Baker,Fleishman, Dave
Cc:Vince Lopez III,Butch Lopez
Mon,Nov 9 at 4:29 PM
Mr. Baker, Thank you for your email.As you might imagine, in the week after an election, my work day is
extremely full. As such, I will not be able to write as full a response to your email as I might otherwise wish
to. That being said, my proposal was not intended as a request to open negotiations. Given the history of
the City's relationship with V. Lopez on the Five Cities Lift Station project, I do not believe that extended
discussions or as you put it, "a process to exchange positions, and information, and then engage in good
faith dialogue," will benefit the City. You and your client have, throughout the pendency of the project,
taken an adversarial approach with the City regarding the delays in the project, and you have repeatedly
threatened to pursue the City for compensation for these delays, all without providing the City any
information whatsoever regarding the foundation for such claims. And your client has repeatedly blamed
others for the delay on the project without any recognition of its own role in that delay. That is hardly
acting in good faith, and I don't believe that additional time will cause your client to have a material
change of heart. I do not intend to argue with you over the legal claims either, as I have neither the time
nor inclination to do so.We intend to proceed with the agenda item on November 17 as previously stated
in the notice of public hearing. If your client does wish to accept the settlement proposal I previously sent,
please communicate directly with the City Attorney, Dave Fleishman,who is copied here. He has not been
involved in the public hearing matter, but he would be essential in formulating any settlement agreement
that included a withdrawal of the agenda item for next week's agenda. Regards,Jim James R. Lewis City
Manager City of Pismo Beach, CA"Classic California" 805-773-7003 www.pismobeach.org -----Original
Message----- From: Scott Baker <sr-baker@pacbell.net> Sent: Monday, November 9, 2020 7:28
Mon, Nov 9 at 4:29 PM
Exhibit 13
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
• Scott Baker <sr-baker@pacbell.net>
To:James Lewis
Cc:Fleishman, Dave,Vince Lopez III,Butch Lopez
Mon, Nov 9 at 5:23 PM
Mr. Lewis,
am disheartened the City is unwilling to engage in any discussions prior to embarking on this
unfortunate and damaging course of action. You state that my client has "repeatedly threatened"
delay claims throughout the pendency of the Project. That is not true. Lopez, in fact, responded to
the City's threats of imposing liquidated damages, which also have been asserted without support
or meaningful discussion. We have continuously and consistently sought dialogue and
information exchange in an attempt to resolve this obvious disparity of opinions. That the City
insists on this precipitous action without first exploring less damaging actions can be seen only as
punitive and is extremely baffling. Lopez is willing to provide the City with what you state is your
objective, not having Lopez construct City projects. Yet you reject that, without discussion, for
what end??
Please immediately provide me with all documentation that relates to the City's position and
supports its decision to hold a public determination by the Council to disqualify Lopez as a City
contractor. It is well settled that Lopez is entitled to due process in this proceeding, including
advisement of the basis of the City's position and all supporting documentation for that position.
Lopez is also entitled to a reasonable opportunity to prepare and provide a response and to a fair
hearing. Given your insistence that the Council hear this matter on November 17, 2020, and
further that only a week prior Lopez has virtually no understanding of, and absolutely no
documentary support for, the City's actions, I cannot envision a scenario whereby Lopez will be
reasonably provided that to which it is entitled with respect to the City's due process obligations.
will expect the requested position statement and supporting evidence by tomorrow.
Thank you,
Scott Baker
Sent from my iPhone
Show original message
Exhibit 14
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
Dear Mr. Lewis,
Although I believe most of the points raised in your communications to me on November 6, 2020 and
November 9, 2020 have been addressed, albeit hastily, I wanted to provide the City with further context
in hopes that you will delay your currently stated agenda and allow the Parties to discuss the issues
informally. As Lopez has already agreed to forebear from bidding any City projects, or pursuing any
claims against the City, during the time we attempt informal resolution, I cannot see how the City would
in any manner be prejudiced by such a course of action. Another reason that I want to provide greater
context to your assertions and our responses is that, in re-reading the correspondences, I detect that
there is some level of misinformation or lack of information that is driving your claims.
The assertions will be addressed in the order in which they appeared in your correspondence to me:
From your November 6, 2020 email -
1. "The challenges we dealt with and the costs we incurred have caused significant damage to the
City and I believe it is incumbent on us to protect the City so it doesn't suffer the same consequences on
future City projects."
Response: You indicate two things here:;First, that the City dealt with challenges and incurred
costs resulting in significant damage to the City. 1 am assuming that you are alleging these challenges
and damages are the result of the conduct of my client. Until your November 6, 2020 email Lopez was
aware only that the City intended to impose liquidated damages(LD's) due to the extended delivery time
for this Project. As of this moment, we are in the dark as to the scope and extent of these stated
damages, and have seen no support for them. Informal discussions between Lopez and the City would
allow you to present, and Lopez to consider and respond to, your assertions in this regard. Second, you
state the City's objective in pursuing this course of action is to protect the City from a recurrence of this
situation. Again, Lopez has already indicated that it would agree not to bid on City projects for a
specified period of time, so no formal action in this regard is necessary, and the stated objective of
"protecting"the City would be met. You reiterate this objective in the sentence following, and our
response is the some.
2. "It is time that your client's ability to bring poor/untimely workmanship and financial damages
to the City,which is already suffering, comes to an end."
Response: Again, Lopez has been long aware of the City's position that LD's could be imposed as
a result of the delayed completion of the Project. This was the first indication that the City contends it
has been damaged by"poor workmanship". While the Parties clearly have a difference of opinion
regarding the causation for delayed completion, Lopez cannot respond to the poor workmanship
allegation as the City has not provided any specific information or support. Again, informal discussions
between the Parties would allow for whatever information the City has in this regard to be presented
and considered. And, once again, with Lopez agreeing to not bid on City projects your stated objective of
bringing this issue "to an end"is met.
3. You premise your potential agreement to table the proposed agenda item on three
"concessions" from Lopez:
1) "V. Lopez and Sons will not bid on any project sent out for bids by the City of Pismo
Beach for a period of 25 years from the date of the agreement."
Response: Lopez will agree to a reasonable time of abstention from considering/bidding on City
projects. Twenty-five years is not reasonable. Federal contractors are subject to FAR regulated
debarment which generally limits the period of abstention to three years. Similarly many municipalities
and counties have "debarment"procedures in place, most of which limit the period to substantially less
than twenty-five years, usually maximized at five years. In any event, this, again, is an area where
informal discussion could yield an agreed period of abstention that would satisfy the City's objective.
2) "V. Lopez and Sons will permanently drop all claims against the City of Pismo Beach and
will hold the City harmless against any claims arising out of the project that is the subject of this matter,
entering into an appropriate release agreement."
Response: Lopez previously stated, through my communications, that it was agreeable to this,
assuming the City will provide similar releases.
3) "The total approximate financial loss to the City as a direct result of V. Lopez is
$322,500, which includes additional project management and inspection fees, additional engineering
services during construction (ESDC), additional costs and working days associated with change orders
the City was not obligated to issue.This does not include liquidated damages or City staff time or
equipment costs.As part of the agreement,V. Lopez and Sons will remit 50%of this amount back to the
City, or$161,250. Alternatively, the City would retain the entire remaining amount of the retention,
$152,574, and V. Lopez would indemnify the City against any potential claims by subcontractors on the
project.As part of this, assessment of liquidated damages would be dropped, and the City would release
V. Lopez from any claims for delay or liquidated damages."
Response: This, again, is the first Lopez became aware of the City's allegation of damages, apart
from potential LD's. Lopez cannot respond to the claim as it has no information regarding what is
referred to, the cause of the alleged damage, or how it was calculated. You provide two scenarios that
the City would accept: Lopez can pay the City$161,250, or Lopez can forfeit its retention of$152,574
and indemnify the City from any potential subcontractor claims. You further indicate that this would be
in lieu of the City assessing LD's. Without seeing any substantiation for this proposal Lopez cannot either
agree to or reject it. Again, if the Parties engaged in informal resolution discussions the City could
provide whatever support it has for this and, as we promised in prior communication, Lopez will in good
faith consider and respond to the City's presentation. (On November 9, 20201 wrote to you: "On behalf
of my client 1 can promise a fair and reasoned evaluation of the City's claims once we have the basis and
support for those claims identified and provided. In turn, 1 would ask that the City reciprocate and
reasonably consider the position of my client, and the support for that position that we can provide.').
From your November 9, 2020 email —
1. " . . . my proposal was not intended as a request to open negotiations. Given the history of the
City's relationship with V. Lopez on the Five Cities Lift Station project, I do not believe that extended
discussions or as you put it, "a process to exchange positions, and information, and then engage in good
faith dialogue," will benefit the City."
Response: Depending on how "extended"is defined 1 would agree that neither party would
benefit from dragged out, non-productive, discussions. But to reject anv discussion under these
circumstances is impractical and not well reasoned. 1 seriously doubt you would commit the City to a
proposal such as you made to Lopez, without having been provided any details or support for the
demands. You apparently provided a timetable to Lopez to accept your proposal"as is"within one day,
yet we have yet to receive any documentation regarding the City's allegations that provide the
framework for the demands in your proposal. That is, simply, not reasonable. Knowing that this is
becoming akin to a "broken record", I do not see how the City is in any manner harmed by postponing
the Council hearing, and engaging in mutual disclosures and discussion. The City can always determine
that the discussions are not bearing fruit and reset the hearing. On the other hand, the real possibility is
that the hearing can be avoided and a resolution reached, or at least the contested issues narrowed.
2. "You and your client have,throughout the pendency of the project,taken an adversarial
approach with the City regarding the delays in the project, and you have repeatedly threatened to
pursue the City for compensation for these delays, all without providing the City any information
whatsoever regarding the foundation for such claims."
Response: This assertion is absolutely not true, and is the primary basis for my statement that 1
did not believe you were completely informed regarding this matter. First, the approach taken by Lopez
(and since you mentioned it, by me)has not been adversarial. Lopez has consistently responded to the
City's threats of imposing LD's by rejecting responsibility for the delayed completion of the project and
far from not providing support for its position has submitted numerous RFI's resulting in volumes of
change orders and design modifications, all of which consumed inordinate time, and none of which was
the responsibility of Lopez. Only when the City continued to insist that Lopez was solely responsible for
the delays did Lopez become even remotely "adversarial". Even then, Lopez, and I, continued to push the
City for informal resolution of this issue.
For example, in response to Public Works Director Fine's statement to Lopez in October, 2019
that LD's were going to be assessed Lopez responded by outlining its view on delay causation, and
communicating the following:
"In any event,VLS is always committed to providing an exemplary product in as
expeditious a manner as the circumstances reasonably allow. That commitment
remains intact regarding this Project, and is not capable of being made greater by
threats of liquidated damages. If the City seriously intends to assess liquidated
damages against VLS please let me know immediately, and we will proceed
accordingly. It seems to me that both of our energies and resources are better spent
on assuring the efficient and successful conclusion to the Project than on calculating
and preparing time impact analyses.You indicated in your October 8, 2019 email that
you would not provide further written communication to us regarding this matter, but
would be willing to meet. If that is still your position please let me know when and
where we can meet and hopefully put this issue to rest." (October 25, 2019).
Even the "Lopez Notice of Potential Claim"(attached)could hardly be considered"adversarial'; again
merely advising the City that it believed, contrary to the City's position, that the delays were caused by
others than Lopez, and that much of the delay would likely be considered "compensable". The City's
response, however, coming from its counsel and emphasizing the impending LD's, can hardly be
considered as an avenue to conciliation (also attached).
Due to the City responding through its counsel I become involved. My responses cannot be considered
adversarial, and 1 have continued the Lopez objective of a less litigious and more informal process of
"dispute resolution". For example, in responding to the February 5, 2020 letter from the City's counsel I
stated the rationale for the Lopez Notice of Potential Claim, and suggested a process of potential
resolution:
"Your client's ongoing threats of imposing liquidated damages based solely on the
extension of Project duration, and without acknowledging its role in the delays, left VLS
no choice but to formally notify Mr. Fine of its position. In this regard, and as the
Project moves toward completion, it might be useful for the Parties to consider
voluntarily invoking the process contemplated by former Public Contract Code section
9204(which applies to this contract), and begin to move toward the "meet and confer",
mediation, and possible arbitration of these issues. Please advise me of your thoughts
in this regard."
In a follow up communication on April 16, 2020, 1 again suggested the informal dispute resolution
process described in Public Contract Code section 9204. Then, again, in a June 29, 2020 letter(attached)
I urged the Parties to engage in some process short of litigation to resolve their differences, and
indicated a willingness to discuss "any resolution methodology"the City or its counsel might suggest.
When the City made it clear by its final "Working Day Statement"and email communication to Lopez,
that it would, indeed, be imposing LD's, 1 submitted a claim under section 9204 for the purpose of
invoking the less formal and litigious process I had long suggested to address the LD's, and ultimately,
the responsibility for delayed completion. I have never had a response from the City to any suggestion of
informal resolution attempts, nor a response to the section 9204 claim. I believe that your claim of Lopez
and me being "adversarial"in this matter is demonstrably inaccurate, and not a reasonable basis for the
City to decline Lopez'request to postpone the Council hearing and engage in informal discussions.
3. "If your client does wish to accept the settlement proposal I previously sent, please
communicate directly with the City Attorney, Dave Fleishman,who is copied here."
Response: My client does wish to enter into an agreement with the City, and has already stated
it would agree to refrain from City projects, and refrain from pursuing claims against the City. However,
it cannot, given the complete lack of support provided, simply agree to your proposal. Your "take it or
else"approach is not constructive and demonstrates a willingness to leverage a public airing of the City's
claims against my client against Lopez. You are well aware that even the public posting of an agenda
item predicated upon a "staff recommendation"to disqualify Lopez from future City projects will have a
significantly deleterious impact on Lopez. The especially troubling part of this is that result will occur
regardless of the true facts.
Conclusion—
I understand that you are, as you stated, busy in these days after the election, and I apologize for the
length of this correspondence. However, it was the City that set the date, and provided the short time
frame in which to respond. And, I wanted to be sure that, prior to the response deadline you imposed,
you were aware of some of the background, as provided above and in the attachments. Based upon
this, and our prior correspondence, I again request the following:
1. The City remove (or not place) the Council hearing regarding Lopez on agenda for November 17,
2020, and instead postpone the hearing to a date to be determined, if it is necessary;
2. That the City suggest a process under which the Parties can exchange positions, and support for
those positions, and then meet and discuss the relative merits of the positions and their evidentiary
support;
3. That the City, in light of this exchange of information and discussion, work with Lopez in a good
faith effort to resolve all, or as many issues,that exist between them; and,
4. That the substance of this information and discussion will remain confidential between the
Parties during the process.
Lopez is agreeable to any reasonable schedule for this to occur, and will agree that during the duration
of the process it will forebear from bidding on any City project, and will further forebear from pursuing
any affirmative claim against the City.
Either party can terminate the process at any time and such termination, or the fact that the process
occurred,shall have any restrictive impact on either party's rights to pursue any Council hearing, or
claims, or other remedy that either party believes it may have. I am hopeful that both Parties would
exercise any termination with caution and reason.
Please advise me of the City's response to this as soon as practical.
Thank you,
Scott Baker
Exhibit 15
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
11/13/2020 AT&T Yahoo Mail-V. Lopez Hearing Background
V. Lopez Hearing Background
From: James Lewis Qlewis@pismobeach.org)
To: sr-baker@pacbell.net
Cc: dfeeishman@rwglaw.com
Date: Thursday, November 12, 2020, 10:47 AM PST
Mr. Baker-
At our executive team meeting this morning, Mr. Fleishman provided me a rundown of your phone conversation with him
yesterday. I'm sorry if your client feels that the City's proposal constitutes extortion, because the City is fully intending to
go forward with the declaration of"Non-responsible Bidder". The City's costs from increases to construction
management alone exceeded $200,000 for which your client will ultimately be responsible.
In an attempt to try to resolve this matter informally prior to publishing of the agenda today at 3 pm I am providing you
the final draft of the staff report so you may see the basis on which staff is making its recommendation. Please note this
is still a draft, and has not been released to the public, however, I am hopeful you will share it with your client in an effort
to seek an amicable resolution. Once the agenda is published I will no longer consider revoking the item from the
agenda so time is of the essence. We are offering you a very generous settlement that your protects your client and
avoids the need of a much greater expense from your client in the future.
Regards,
Jim
James R. Lewis
City Manager
City of Pismo Beach, CA
"Classic California"
805-773-7003
www.pismobeach.org
® 11.13 Report Non Responsible Bidder V3.pdf
22S.SkB
1/1
Exhibit 16
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
Re: V. Lopez Hearing Background
From: Scott Baker(sr-baker@pacbell.net)
To: jlewis@pismobeach.org
Cc: dfeeishman@rwglaw.com
Date: Thursday, November 12, 2020, 11:42 AM PST
Mr. Lewis,
I received your email and forwarded it to my client. I am hoping to discuss its contents with him soon.
Although I have not been able to read the City's draft report in detail, I do have some preliminary
questions.
1. Regarding the damages claimed by the City, you have not provided any backup for these costs other than
to break them down. What (and where) are Construction Managment amendments 1, 2, and 3? Also, is the
City contending that VLS is responsible for additional engineering? What is this and why would VLS be
responsible? And, regarding Change orders 21 and 26 why are you charging $1000 for the additional days
granted to VLS? How can you contend that the City can unwind Change Orders by saying it was not
"obligated" to issue them?
2. What is the City's authority for the debarment action? I find no City ordinance that provides for this
process.
3. Please clarify exactly what your "demand" is, as the draft resolution indicates a 5 year debarment, and
your email stated 25 years.
4. How can the City justify the time and expense of this hearing when VLS has already agreed to not bid
City projects, and that is the ONLY outcome that can come from the hearing?
Please get back to me asap so I can have this information and clarification when I speak to my client.
Thanks,
Scott Baker
On Thursday, November 12, 2020, 10:47:27 AM PST, James Lewis <jlewis@pismobeach.org>wrote:
Mr. Baker-
At our executive team meeting this morning, Mr. Fleishman provided me a rundown of your phone
conversation with him yesterday. I'm sorry if your client feels that the City's proposal constitutes
extortion, because the City is fully intending to go forward with the declaration of"Non-responsible
Bidder". The City's costs from increases to construction management alone exceeded $200,000 for
which your client will ultimately be responsible.
In an attempt to try to resolve this matter informally prior to publishing of the agenda today at 3 pm I am
providing you the final draft of the staff report so you may see the basis on which staff is making its
recommendation. Please note this is still a draft, and has not been released to the public, however, I
am hopeful you will share it with your client in an effort to seek an amicable resolution. Once the
agenda is published I will no longer consider revoking the item from the agenda so time is of the
essence. We are offering you a very generous settlement that your protects your client and avoids the
need of a much greater expense from your client in the future.
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11/13/2020 AT&T Yahoo Mail-Re:V.Lopez Hearing Background
Regards,
Jim
James R. Lewis
City Manager
City of Pismo Beach, CA
"Classic California"
805-773-7003
www.pismobeach.org
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Exhibit 17
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
Re: V Lopez
From: James Lewis Qlewis@pismobeach.org)
To: sr-baker@pacbell.net
Cc: dfleishman@rwglaw.com;vince@vlopezjrandsons.com; butch@vlopezjrandsons.com
Date: Thursday, November 12, 2020, 12:08 PM PST
Scott-
We have only posted the standard public hearing notice required by law. This cannot be pulled until the agenda item is
and your client has not made this decision. We have a little less than 3 hours left.
Regards,
Jim Lewis
City Manager
Pismo Beach, Ca
On Nov 12, 2020, at 11:47 AM, Scott Baker<sr-baker@pacbell.net>wrote:
External Email
Mr. Lewis,
I just received word from my client that the notice of the Agenda Item for November 17, 2020 has
already been posted on the City's website. If we are to move forward to consider resolving this matter
today that needs to be removed immediately.
Thanks,
Scott Baker
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Exhibit 18
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
V Lopez
From: Scott Baker(sr-baker@pacbell.net)
To: jlewis@pismobeach.org; dfleishman@rwglaw.com
Cc: vince@vlopezjrandsons.com; butch@vlopezjrandsons.com
Date: Thursday, November 12, 2020, 12:14 PM PST
Gentlemen,
I just spoke briefly with my client. Given the time constraints imposed by the City I will not address the
draft staff report's contents, and instead cut to the chase. Suffice to say, my client and I do not agree with
the staff report, and certainly do not agree that the City has been damaged by my client.
That being said, my client has authorized me to convey the following non-negotiable offer:
1. The City may retain $69,000 from the retention moneys currently withheld, and this is not to be
considered an admission of any liability or responsibility for the delay in project completion;
2. V. Lopez & Sons will not bid on or participate in any City owned project for a period of five years;
3. V. Lopez & Sons will not pursue any claims against the City related to this project;
4. The Parties will execute an agreement that includes mutual general releases of liability;
5. The City will immediately remove any and all references to the proposed Agenda item and will not
further post or publish anything related thereto; and,
6. The terms of this resolution will be confidential.
Please note that until last Friday afternoon my client understood only that the City was imposing liquidated
damages in the amount of$69,000 against V. Lopez Jr. & Sons, which my client continues to firmly believe
is not justified. The manner in which the City has leveraged the public hearing is not well taken, and my
client's offer should not be viewed as any admission of liability to the City, but rather is made based solely
upon the business ramifications of the City's course of action, and the expense and time impact of
protracted litigation.
Please respond immediately to this offer, as required by the exigent timeframe upon which the City has
insisted.
Thank you,
Scott Baker
Exhibit 19
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
Re: V Lopez
From: David M. Fleishman (dfleishman@rwglaw.com)
To: sr-baker@pacbell.net
Cc: jlewis@pismobeach.org
Date: Thursday, November 12, 2020, 02:31 PM PST
Scott,
If the offer is non-negotiable, I have been directed to let you know the offer is rejected.
While your client may feel it is in the right, from a purely business standpoint, your client stands to lose a lot more than
the $69,000 you have offered here. This is money that the City Council already directed to be withheld from the
retention as part of the notice of completion that was approved by the Council more than a month ago. Worse, though,
is the fact that the City will be pursuing V. Lopez for the full measure of its damages in connection with the delays in the
project caused by your client, which will certainly exceed the amount in the retention after the liquidated damages are
deducted.
The City's offer was one of compromise, not"extortion"as your client put it. And if your client doesn't have a change of
heart in pursuing a litigation strategy, I suspect there will be significantly greater expense to your client, not only from the
litigation, but also from defending against the treble damages that I have alluded to in the past under the False Claims
Act. Those are claims the City will pursue, either affirmatively in its own lawsuit, or in a cross-complaint should your
client file suit against the City. Your client is already being sued for such false claims by another public agency.
The settlement proposal was a way out of all that, and unless your client has a change of heart in the next half hour or
so, they will have no one to blame for themselves to any adverse impact to their business. They have a way out, and
while they may think it unfair, the City is offering a significant discount on its own damages to avoid litigation and to allow
the parties to go their separate ways. It is truly unfortunate your client can't see the business sense of resolving the
matter.
Dave Fleishman
Of Counsel
[cid:OF5B3E313FE74EDC8173672FEA1 DD3D4]
RICHARDS WATSON GERSHON
847 Monterey Street, Suite 206
San Luis Obispo, CA 93401
T. 213.626.8484
D: 805.706.0962
F: 213.626.0078
W: rwglaw.com<http://rwglaw.com>
This email may contain material that is confidential, privileged and/or attorney work product for the sole use of the
intended recipient.Any review, reliance or distribution by others or forwarding without express permission is strictly
prohibited. If you are not the intended recipient, please contact the sender and delete all copies.
On Nov 12, 2020, at 12:14 PM, Scott Baker<sr-baker@pacbell.net<mailto:sr-baker@pacbell.net>>wrote:
Gentlemen,
just spoke briefly with my client. Given the time constraints imposed by the City I will not address the draft staff
report's contents, and instead cut to the chase. Suffice to say, my client and I do not agree with the staff report, and
certainly do not agree that the City has been damaged by my client.
1/2
11/13/2020 AT&T Yahoo Mail-Re:V Lopez
That being said, my client has authorized me to convey the following non-negotiable offer:
1. The City may retain $69,000 from the retention moneys currently withheld, and this is not to be considered an
admission of any liability or responsibility for the delay in project completion;
2. V. Lopez& Sons will not bid on or participate in any City owned project for a period of five years;
3. V. Lopez& Sons will not pursue any claims against the City related to this project;
4. The Parties will execute an agreement that includes mutual general releases of liability;
5. The City will immediately remove any and all references to the proposed Agenda item and will not further post or
publish anything related thereto; and,
6. The terms of this resolution will be confidential.
Please note that until last Friday afternoon my client understood only that the City was imposing liquidated damages
in the amount of$69,000 against V. Lopez Jr. &Sons, which my client continues to firmly believe is not justified. The
manner in which the City has leveraged the public hearing is not well taken, and my client's offer should not be
viewed as any admission of liability to the City, but rather is made based solely upon the business ramifications of the
City's course of action, and the expense and time impact of protracted litigation.
Please respond immediately to this offer, as required by the exigent timeframe upon which the City has insisted.
Thank you,
Scott Baker
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here<https://www.mailcontrol.com/sr/dDO2JwBieGPGX2PQPOmvUvmIdA89nuwlzPK yH65SrgE7EQAX13rvM7gxnDhh
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Exhibit 20
To the Submittal of V. Lopez Jr. & Sons
Before the Council of the City of Pismo Beach
Agenda Item 1 Lb.
November 17, 2020
Re: Pismo/Lopez
From: Scott Baker(sr-baker@pacbell.net)
To: dfleishman@rwglaw.com
Date: Friday, November 13, 2020, 11:44 AM PST
Well, I have seen the contract and the "final' working day statement, and, one I do not see where the
engineer extended the date of completion other than for the reasons stated in the working day statement
(change orders, weather, holidays, City approved "non-working" days). Two, the liquidated damage clause
states a "liquidated" amount which is what the staff report (consistent with the final working day statement)
multiplied by 69 days to come up with $69,000 which are the contractual LD's (subject to Lopez objection
and PCC 9204 challenge). That is exactly what Lopez offered the City yesterday. Under what theory does
the City contend it can get liquidated AND "actual" delay damages?
On Friday, November 13, 2020, 11:25:25 AM PST, David M. Fleishman <dfleishman@rwglaw.com>wrote:
Your email indicated yesterday that your client's offer was non-negotiable. My client did not accept that non-
negotiable offer. I'm not sure what the point of your email is, then. If your client has changed its mind, there is
always a theoretical possibility of settlement. I've settled cases in the middle of trial in the past, and even on appeal,
so I never rule it out 100%.
But it doesn't sound like you're attempting to reopen settlement negotiations. Please let me know if I am incorrect,
though, and if I am, what you propose that is materially different than the non-negotiable offer from yesterday. If your
client does have something different to propose, I would, of course, be ethically bound to communicate such an offer
to my client.
That being said, I trust your client has provided you and you have reviewed the contract documents in this matter. In
the liquidated damages provision, Section 6.13, there is, in addition to the liquidated damages for delay, the following:
It is further agreed that in case the work called for under the Contract is not finished and completed in all parts and
requirements within the time specified, the City Engineer shall have the right to extend the time for completion or not,
as may seem best to serve the interest of the City; and if he decides to extend the time limit for the completion of the
Contract, he shall further have the right to charge the Contractor, his heirs, assignees, or sureties, and to deduct from
final payment for the work, all or any part, as he may deem proper, of the actual costs of engineering, inspection,
superintendence, and other overhead expenses which are directly chargeable to the Contract, and which accrue
during the period of such extension, except that the cost of final surveys and preparation of the final estimate shall
not be included in such charges.
In order to keep the project moving forward, it is my understanding that the City Engineer agreed to a significant
extension of the time limit for your client to complete the work, rather than stopping the work mid-project and suing for
breach. As such, the City is entitled to recover the"actual costs of engineering, inspection, superintendence, and
other overhead expenses." Your client agreed to this language, and if you feel the City is acting improperly in
enforcing its contractual right to recover the additional expense incurred as a result of your client's delays in the
project, you're certainly welcome to make that argument. But that's what the parties agreed to, and that's the
difference in your client's number and my client's number. It is hardly bad faith to insist on compliance with
contractual language. And the City's offer was a significant discount on the actual additional expense incurred by the
City.
You know my client's position, which I won't restate here. Although the agenda materials have been published, the
City Council has not yet taken action. If you want to stop the public hearing from going forward, your client is going to
need to take a hard look at the road ahead and make some decisions that are different than have been
communicated so far.
Dave Fleishman
Of Counsel
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11/15/2020 AT&T Yahoo Mail-Re: Pismo/Lopez
[cid:OF5B3E313FE74EDC8173672FEA1 DD3D4]
RICHARDS WATSON GERSHON
847 Monterey Street, Suite 206
San Luis Obispo, CA 93401
T. 213.626.8484
D: 805.706.0962
F: 213.626.0078
W: rwglaw.com<http://rwglaw.com>
This email may contain material that is confidential, privileged and/or attorney work product for the sole use of the
intended recipient.Any review, reliance or distribution by others or forwarding without express permission is strictly
prohibited. If you are not the intended recipient, please contact the sender and delete all copies.
On Nov 13, 2020, at 10:56 AM, Scott Baker<sr-baker@pacbell.net<mailto:sr-baker@pacbell.net>>wrote:
David,
In preparing our written submittal for the hearing I continue to be perplexed as to how the hearing can be justified. I
am not copying this to my client or to Mr. Lewis, but I strongly believe that Lopez' offer yesterday is all the City is
potentially entitled to, even assuming Lopez is 100% responsible for the delay. Given that, plus Lopez'agreement to
the five year"no bid" and mutual releases, the City has accomplished all that it can. Because the agenda and staff
report have already been published I imagine that Lopez considers the horse to have already escaped the barn and
will want to submit and discuss with the council its evidence and views. If your client would remove the agenda item
as moot I could see if Lopez would refrain from submitting the materials. These materials contain considerable
substantiation that the City's course of action is unwarranted, that the damages the City seeks above the offered LD's
is not legal, and that the entire method and timing of the process/demands/and rejection of the Lopez offer
demonstrates bad faith and vindictiveness with no legitimate purpose. Also, I think you will see a concerted and
similar effort from other contractors that are facing similar treatment by the City.
Let me know if you think there is any utility in further pursuing squelching the hearing.
Thanks,
Scott
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