Los Angeles Trade Technical College’s new Construction Technology Building is seeing an ironic construction setback, as a January 13, 2022, lawsuit from supplier PERI Formwork Systems, Inc. claims a project subcontractor is holding back payment for its supplies.
The company is claiming over $3.9 million in damages as part of the action.
PERI Formwork supplies concrete formwork and shoring materials for projects, materials which are removed and rented to other projects once concrete structures have the necessary rigidity to stand on their own.
This formwork was rented by subcontractor W.M. Klorman Construction in September 2020, but according to the company, W.M. Klorman has failed to pay its monthly invoices since the project began, leaving what it alleges is $944,286.18 in unpaid invoices by January 6, 2022.
Overall, PERI Formwork says that its materials have a value of $3,914,958.62, and is claiming that amount as damages while citing a number of allegations — including breach of contract — against W.M. Klorman, Harper Construction, the Los Angeles Community College District, and Los Angeles Trade Technical College.
Learn more: Breach of Contract Explained for Construction Contractors
The dispute goes beyond simple nonpayment, though: As per the lawsuit, PERI Formwork is alleging that W.M. Klorman falsified project payment waivers, saying that it submitted “one or more false and/or altered payment waivers to [Harper Construction] under PERI’s name and signature, in order to obtain payment from Harper while avoiding its obligations to pay PERI.”
According to the lawsuit, “Harper alerted PERI to the existence of a false payment waiver when it provided a copy of the same to PERI in response to PERI’s demand for payment…PERI discovered that Klorman had submitted an altered and falsified Unconditional Waiver and Release on Progress Payment, under PERI’s name and signature, for invoices through March 31, 2021.”
“Without PERI’s knowledge or consent, Klorman removed the ‘Exceptions’ from the form and submitted the same to Harper for payment under PERI’s signature,” the filing continued.
Though PERI Formwork’s claims are very serious against the lawsuit’s defendants, this is a great example of the power of proper document retention.
“Whenever a dispute arises, the best way to defend or clarify your position is through documentation,” notes construction lawyer Alex Benarroche. “Your construction company needs to be sure it can defend itself against claims, or be able to enforce claims against others.”
“If a dispute reaches the court,” Benarroche continues, “well-organized records are not only your best line of defense, but also your best ammo to prove your side of the story.”
PERI Formwork’s accusations of falsified payment waivers would be especially damaging for W.M. Klorman if found true. There’s precedent for contractors who engage in this type of activity to end up in a difficult position in court: A report from the American Bar Association noted that in a 2015 construction dispute, a Missouri appeals court awarded significant damages after deciding that individual owners of construction companies could be found liable for fraudulent lien or payment waivers.
This isn’t the only dispute PERI Formwork has been involved in recently, either: The company filed a July 2021 lawsuit over nonpayment after it provided materials for a project in Poway, California which it similarly claimed were kept by the project’s general contractor after its contract was terminated.