Big losses over a contract claim lawsuit by a subcontractor on Second Avenue Subway work in New York City, and on a class-action suit for a decade worth of prevailing wages by nonunion flaggers, could have been prevented if law frm Troutman Pepper Hamilton Sanders had provided competent representation, claims Judlau Construction in a malpractice lawsuit against the law firm.
The adverse subway station verdict came in New York state court late last year and the prevailing wage case was upheld on appeal in 2022. The verdicts would have come out in Judlau's favor, it contends, except for Troutman Pepper's sloppy work and mistakes.
In one instance, Judlau accused Troutman Pepper of lateness in submitting materials to the court and sending an inexperienced junior staff member to handle critical tasks and court motions. In another, the contractor claims a law firm principal in charge of the cases, who is also named as a defendant, had a conflict of interest because he was allegedly serving as a staff counsel for a Judlau competitor simultaneously.
Troutman Pepper, in a statement, denied the claims and has retained a law firm to represent it. "The lawsuit is without merit, and we will present our defenses in court at the appropriate time," it stated.
Although most law firms are hit with malpractice claims at some time, according to the American Bar Association, such lawsuits are not common in civil court construction disputes. For its malpractice claim, Judlau is represented by Jonathan D. Lupkin, a veteran commercial lawyer who recently joined the Rottenstreich Farley legal practice.
In the larger of the two cases in question, nonunion project employees used as traffic flaggers in 2017 brought a class action lawsuit in New York state court against Judlau, claiming they were cheated by not being paid prevailing wages as required by law.
Judlau’s lawsuit against Troutman Pepper states that the employees were in fact crossing guards, not flaggers, and that Troutman Pepper’s failure to understand that and address it quickly in court is a prime example of the law firm’s malpractice.
Attorneys for the flaggers, who were paid $15 to $18 an hour with no benefits, hailed the verdict when it was upheld in an April 2022 appeal as a "huge win." Prevailing wages would have been $37 to $41 an hour with a nearly equal amount per hour in benefits.
An appeals court ruled that the flaggers' role in protecting safety of the construction crew and public, including working close to equipment as it moved from place to place, qualified them for prevailing wages, their attorney said.
All flaggers who worked for Judlau on New York public works projects since April 2011, including flaggers subcontracted through an employment firm, were automatically covered by the court rulings, accounting for the $44-million judgement.
One of the New York City area's most prolific infrastructure contractors, Judlau had previously been forced to pay wages retroactively to workers who had been employed as flaggers. A 2016 U.S. Dept. of Labor consent order forced the firm to pay flaggers who worked for it on a Manhattan street reconstruction project $1.1 million in overtime pay.
However, the city of New York took responsibility for making the error and agreed that Judlau had done nothing wrong and indemnified the contractor.
In the class action lawsuit, Troutman Pepper failed to bring critical evidence, such as the distinction between a flagger and crossing guard, to the court's attention and neglected to investigate the matter adequately, Judlau now claims. Had it done so, the law firm would have proved that the contractor never used the flaggers for prevailing-wage laborers' tasks, says the construction company.
"This judgment amounted to an unjust windfall for work that was never performed," Judlau argues, "and could never have been performed undetected for over a decade on large public infrastructure projects that was consistently and regularly monitored by the prime contractor and municipal governmental representatives as well as independently monitored daily by union representatives."
Troutman Pepper also left Judlau in the dark on important turning points in the case—such as the flagger claims being certified as a class action, a summary judgement ruling on liability or that damages would be determined by a special referee appointed by the judge, the contractor says.
Second Avenue Subway Case
The other costly adverse verdict was much different.
In that case, joint venture firm Scalamandre/Oliveira was a subcontractor to Judlau on its $258-million contract to do subway station finish work and mechanical, electrical and plumbing. It sought damages for cost overruns from Judlau and also named as defendants Judlau's surety and insurers and the New York Metropolitan Transportation Authority and New York City Transit Authority.
The joint venture, comprised of Freeport, N.Y.-based Peter Scalamandre & Sons and Albertson, N.Y.-based Oliveira Contracting, eventually was terminated by Judlau.
The joint venture's $14-million contract involved concrete floor slabs and walls. Work on the project was completed months late in 2014. The joint venture claimed in a state court complaint in 2016 that Judlau failed to coordinate work and shop drawings, have its rebar subcontractors deliver and do work on time, provide cranes it promised to bring in to move materials and to provide adequate access.
The joint venture sought $10.1 million from Judlau for all the alleged various extra costs and delays.
In an initial reply to the suit in 2016 prepared by Troutman Pepper, Judlau denied the allegations against it and made a counterclaim for damages against the joint venture subcontractor.
After years of motions and discovery, a judge held a trial without a jury where the two adversaries introduced 320 pieces of evidence and a total of eight witnesses. Last November, state Supreme Court Judge Andrew Borrok ruled against Judlau, faulting its overall management but especially its handling of the rebar supply and coordination.
"The credible evidence unequivocally demonstrated" that the joint venture "in no way delayed completion of the project," he said. Various witnesses and evidence presented by Judlau were unconvincing, Borrok added.
Last December, indicating it was not finished litigating the matter, Judlau, along with its surety and insurers, notified the court that they were changing case attorneys from Troutman Pepper to Seyfarth Shaw. In January that law firm began an appeal of Borrok's decision and verdict.
Judlau made public its claims against Troutman Pepper this month. The most explosive was that the law firm principal in charge of both cases "was simultaneously and improperly representing Judlau as a Troutman partner" in the two critical cases "while at the same time serving as executive vice president and general counsel for one of Judlau’s competitors"—one that the contractor "was directly adverse to ... in a contentious arbitration."
These "dual roles constituted a clear violation" of professional obligations because of the conflict, Judlau alleges.
