Jacobs Engineering contact breach lawsuit dismissal request partially granted

By Carrie Salls | Nov 30, 2018

SAN FRANCISCO – A federal court has granted in part and denied in part a motion to dismiss a complaint between a nonprofit association and an engineering firm over the construction of a hospital.

Architectural firm Jacobs Engineering Group Inc.’s motion to dismiss a breach-of-contract lawsuit filed by Chinese Hospital Association was granted “to the extent plaintiff’s breach-of-contract claim rests on defendant’s ordinary obligation to perform work consistent with the standard of care imposed on an architect,” according to a Nov. 20 ruling of the U.S. District Court for the Northern District of California.

However, U.S. Magistrate Judge Jacqueline Scott Corley ordered Jacobs Engineering Group to file an answer to Chinese Hospital Association’s allegations that the contract was breached for other reasons within three weeks of the Nov. 20 ruling.

“'Because the nature of the duties to be performed and the nature of the alleged wrongful conduct are factually disputed issues, we cannot say whether the gravamen of the action is legal malpractice or not, i.e., we cannot say whether the legal or nonlegal functions were the predominate reason for the agreement, nor can we say whether the alleged wrongful conduct was legal or nonlegal in nature,'” Corley said in her order, citing a previous appellate court ruling.

U.S. Magistrate Judge Jacqueline Scott Corley  

The court said the association originally agreed to hire Carter & Burgess Inc. to “design and administer the construction of a modern, eight-story hospital building” in May 2007. Carter & Burgess was later purchased by Jacobs Engineering Group, and the latter took over for Carter & Burgess in the design and construction of the association’s hospital.

The association planned to replace another hospital with the new building and ensure that its campus met earthquake-safety guidelines “without interrupting plaintiff’s ability to continue to serve the health care needs of the community,” the order said.

The design and construction of the new facility was to be completed in several phases that were based on the need for approval by the California Office of Statewide Health Planning and Development (OSHPD).

“In September 2013, after construction of the project had commenced, OSHPD found some of Jacobs’ construction documents defective,” according to the court’s order.

As a result of those defaults, the association terminated its agreement with Jacobs Engineering. Under the parties’ termination agreement, the association was free to hire another firm to fix the design defects and finish the construction of the hospital.

In its lawsuit, the association claimed that is owed more than $10 million by Jacobs in connection with the costs associated with hiring a new firm to complete the project.

Jacobs Engineering claimed in its dismissal motion that since the association’s lawsuit was based on a negligence claim, the statue of limitations for filing the complaint should have been two years. The defendant said this would mean that the deadline for filing the suit had passed.

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