A construction company has sued the developers of Shoreline Gateway — Long Beach’s tallest building — for more than $3 million in allegedly unpaid fees.
The construction firm, Build Group, claims that it met an agreed-upon completion date for the project but that the developer, Ledcor, decided to withhold payment by “using uncompleted punch list obligations as a pretext to create the illusion that substantial completion had not been reached,” the suit states.
“For instance, [Ledcor] took the position that missing motorized shades or missing appliances prevented them from occupying a unit even though [Build Group] was installing shades or missing appliances on the request of the [developer] as they leased certain units,” according to the complaint.
Ledcor was therefore assessing damages against Build Group, the suit continues, even as it was receiving rent payments. Build Group filed its suit in L.A. County court in late June, and the suit was recorded by the county on July 8.
Steve Cvitanovich, general counsel for Build Group, did not respond to a request for comment. Ledcor also did not respond.
Shoreline Gateway, located at 777 East Ocean Boulevard along the waterfront in downtown Long Beach, began accepting tenants last fall and held a grand opening ceremony in March. At 35 stories and over 417 feet tall, the building is 20 feet taller than Long Beach’s One World Trade Center, a downtown office complex that had been the coastal city’s tallest structure since it went up in 1989.
Along with 315 luxury units, 6,500 square feet of commercial space and five levels of underground parking, the city’s new residential jewel also has a lounge with a panoramic view, an outdoor art gallery, a 700-gallon jellyfish tank, a bocce court and a dog park. It shares a large plaza with The Current, an adjacent 17-story building that was part of the same project.
“Shoreline Gateway is now the tallest building in Long Beach,” Mayor Robert Garcia said in a statement released for the grand opening, “and is a symbol of our progress and future.”
It’s also a symbol, according to the new legal complaint, of dishonest business practices.
According to the suit, Ledcor hired Build Group for the construction job in 2018. By then the project, originally envisioned by the developer Jim Anderson — Anderson’s firm Anderson Pacific would later bring on Ledcor as a partner — was already more than a decade in the works and had faced numerous obstacles, including multiple redesigns and the 2012 dissolution of California’s redevelopment agencies, the Long Beach Business Journal reported.
But after Ledcor hired Build Group “disputes about delays and extra costs arose between the parties,” according to the suit. Three years later, in August of last year, Ledcor and Build Group reached a settlement agreement that gave Build Group a few more weeks to obtain the Temporary Certificate of Occupancy before facing penalties.
Build Group contends that it did so, and tenants began moving in immediately, but that Ledcor “refused to concede” the contractor had met the deadline and used the missing “punch list” requirements as a tactic to reduce the amount it owed Build Group.
“[Ledcor] always understood there would be certain punch list work to be completed after [Build Group] achieved TCO,” the suit alleges, referring to the Temporary Certificate of Occupancy. The complaint also calls Ledcor’s interpretation of the agreement “farcical.”
Build Group claims it’s owed more than $3 million plus interest; the contractor also hit Ledcor with a mechanic’s lien for $3.3 million in late April, according to the complaint.
The suit seeks a foreclosure for that mechanic’s lien in addition to breach of contract and other damages. Besides Ledcor, it also names Shoreline Development Partners, the legal entity created by Ledcor to develop the property, as well as bank HSBC, which provided financing.
Ledcor Development is part of Ledcor Group, a major Canadian company with various communications, mining, oil and gas projects. Ledcor Development has developed multifamily projects in both the United States and Canada and has offices in Vancouver, Texas, Hawaii and Orange County.
Build Group works along the U.S. West Coast and has offices in Northern and Southern California and Seattle.
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