Tutor-Saliba-Perini, J.V. v. The Los Angeles County Metropolitan Transportation Authority (Jan. 25, 2005, B143430) [unpublished]

Shortly after the Red Line Subway project connecting downtown Los Angeles and Hollywood was completed, a controversy arose between Los Angeles County Metropolitan Transit Authority (MTA) and Tutor-Saliba-Perini (TSP), which acted as prime contractor for much of the project. TSP sued MTA to recover $16 million for unpaid work, and four years later MTA cross-claimed for alleged breaches of contract, false claim violations, and violations of the Unfair Competition Law.

Following years of contentious discovery disputes, the trial court issued a terminating sanction against TSP when documents that MTA claimed had not previously been disclosed surfaced during trial. A judgment of more than $60 million was ultimately entered against TSP.

TSP retained Horvitz & Levy to file four related appeals: an appeal from three pre-trial orders imposing sanctions against its trial counsel; an appeal from the judgment against TSP and related joint venture entities involved in the subway construction; an appeal on behalf of TSP's performance bond sureties, which had been held jointly and severally liable for the entire judgment; and an appeal from an award to MTA of $31 million in attorneys fees and costs.

On January 25, 2005, the Court of Appeal issued an opinion that reversed virtually the entire judgment. The appellate court ruled the trial courts sanction order violated TSP's due process rights because TSP had not been afforded sufficient notice of the grounds on which MTA's counsel sought sanctions. The appellate court further ruled that, even had TSP received adequate notice, the sanction order terminating the entire case (except for the question of MTAs damages and penalties) was overly broad because MTA failed to demonstrate that any of the allegedly withheld documents were relevant to any of the pending claims.

The court next ruled that MTAs Unfair Competition Law claim was untenable as a matter of law because MTA, as a government entity, had no standing to pursue that claim.

Further, the court of appeal reinstated $13 million in claims TSP had asserted against MTA, which the trial court had thrown out on MTA's summary adjudication motions, ruling that the motions violated the prohibition against adjudicating less than an entire cause of action.

Finally, the court overturned as unsupported by substantial evidence two of the three pre-trial sanctions orders that had been challenged on appeal.

The case has been remanded to the trial court for further proceedings. (Click to see the court's unpublished opinion.)

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