Wildfire debris haulers settle suit for $900,000

Wildfire debris haulers settle suit for $900,000

26 May 2011

published by www.signonsandiego.com

USA — Two contractors will pay $900,000 to settle a lawsuit accusing them of overcharging to haul away the charred remains of 112 Rancho Bernardo homes after wildfires in 2007.

A.J. Diani Construction Co. of Santa Maria and Watsonville-based Granite Construction Co. agreed to the settlement with the city of San Diego without admitting any wrongdoing. In its suit, the city alleged the companies owed more than $2 million of the $9.4 million they billed.

The city will turn over most of the money to the Federal Emergency Management Agency, which reimbursed for the bulk of the removal costs.

“I want this to send a message that contractors are going to be held accountable, and we are going to be watching carefully,” said Councilman Carl DeMaio, whose district includes Rancho Bernardo. He has been involved in the case and attended the settlement hearing in March.

In a prepared statement, James Roberts, Granite’s president and chief executive officer said, “Although we remain confident that these allegations were without legal or factual merit, we are pleased to be able to put this matter behind us.”

Diani company officials did not respond to a request for an interview.

The San Diego Union-Tribune investigated the debris removal program in mid-2008 and found that Diani and Granite removed questionable quantities of debris, overcharged for materials, billed for work they didn’t perform, provided receipts that didn’t back up their charges and cost the city millions more than stated in their contracts.

The companies charged the city by the ton, and the newspaper’s investigation showed they billed to haul away hundreds of tons more than privately retained contractors did from nearly identical lots.

For example, Diani charged $224,506 to remove 897 tons from the remains of a 5,000-square-foot home while a private company billed $77,693 to haul 575 tons from the remains of a 7,000-square-foot home. Both burned to the ground.

Dick Semerdjian, one of two San Diego attorneys who handled the city’s case, said the newspaper’s investigation “essentially provided a road map” for the case.

“We read what you wrote and then we corroborated it through a private investigator,” he said.

In the most expensive taxpayer-funded cleanup, Diani charged $435,463 to clear the remains of Jack Beren’s home on Angosto Way in The Trails, a Rancho Bernardo community with large view lots.

“I’m happy it’s over with,” Beren said about the settlement. “I’ve moved on, and it’s time for the city to move on.”

The Office of the Inspector General for the U.S. Department of Homeland Security conducted a criminal investigation into possible fraud and misuse of taxpayer money. That investigation closed in last year, and no charges were filed.

Diani will pay $500,000, and Granite will pay $400,000, according to the settlement, which was signed in March. The City Council approved the settlement in April, and it was approved in court this month.

DeMaio said the city almost didn’t pursue a lawsuit because it was going to be so costly and because the money recouped would be turned over to FEMA. Ultimately, the City Council hired outside counsel that fronted the costs and will be paid out of settlement proceeds.

Semerdjian said if the case had gone to court instead of a mediator, the fire victims might have been called to testify and would have been forced to relive the disaster. Plus, he said, the case was expensive and “there was going to be some difficulty in establishing that they intentionally, knowingly were submitting fraudulent weight tickets.”

“It was really an effective way to have everybody buy their peace and just move on,” he said.

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