$34 Million Recouped in Infill Apartment Lawsuit

1251
The Porter apartments were under construction last year as part of stage two of the infill construction project. Photo by Casey Amaral.
The Porter apartments were under construction last year as part of stage two of the infill construction project. Photo by Casey Amaral.

The UC Board of Regents is nearing a $32 million settlement with Devcon Construction and various subcontractors over claims of faulty construction at the Porter, Kresge, Stevenson and Cowell apartments. A separate $1.5 million settlement with BAR Architects awaits court approval.

In June 2012 a $2.7 million lawsuit was filed against Devcon to remodel shower floors in the apartments, but upon further investigation more construction issues became apparent. The lawsuit grew to $50 million — $40 million for apartment remodeling, $8 million for lost revenue and additional expenses and $2 million for attorney and expert fees.

Student housing fees were used to pay for the construction, and the lawsuit was to recoup those funds. College, Housing and Educational Services (CHES) associate vice chancellor Sue Matthews said all settlement earnings will go back to student housing. The total cost of the project slightly increased since the lawsuit was filed, and the attorney and expert fees grew to $4 million, which was paid for by student housing fees. More than $10 million of student fees were spent on some aspect of the project and not earned back through the lawsuit.

“We were diligent in our settlement discussion effort and strove to achieve the highest recovery amount possible,” Matthews said in an email. She added that this is one of the highest recovery amounts for a construction lawsuit in UC’s history.

While UCSC’s building contract puts responsibility of the construction quality on the contractor, the need for oversight on large-scale projects remains crucial. Had this lawsuit gone to trial, attorney fees would have been significantly higher and still paid for by student fees.

“The fact that we pursued our legal rights against the firm who originally constructed the Infill project and successfully achieved a high settlement speaks volumes for any future firm who may bid to construct a project on our campus,” Matthews said.

Each building needed about a year for remodel — during the 2013-14 school year the Stevenson and Kresge apartments were closed, and the following year Porter and Cowell apartments were under construction. Over the last two years 742 bed spaces were closed due to the infill apartment construction. All four apartment buildings will be open this year.