One of the few Santa Barbara construction companies chosen to work on the Alma del Pueblo condo and public market project is suing its lead builder for breach of contract. In a lawsuit filed August 28, Katz-Moses & Calles Construction alleges that San Francisco–based Build Group owes them more than $55,000 in unpaid labor and materials.
The filing comes after a few failed rounds of mediation and negotiation, said Katz-Moses attorney Bart Merrill. “This isn’t a knee-jerk reaction,” he said, explaining the legal challenge may be the first in a series as Build Group has reportedly failed to pay other Santa Barbara–area subcontractors, as well. “I have other clients who are waiting to see how this one goes,” he said. It’s unclear who those clients are, but county records show that Insulate Santa Barbara, Craig Roof Company, Blum and Sons Electric, Flynn’s Painting and Refurbishing, and Stock Building Supply all worked on Alma del Pueblo. None of them wished to comment for this story. Approximately 15-20 subcontractors were involved in the project.
Upon completion of the luxury downtown space last spring, Build Group reportedly back-charged a number of its subcontractors, including Katz-Moses. The San Francisco firm claimed shoddy or incomplete work, but sources familiar with the project have speculated that Build Group overextended itself with its first venture into the Santa Barbara market and is attempting to salvage lost revenue through the multiple back-charges. Merrill accused Build Group of “trying to nickel and dime” its subcontractors, a few of whom have capitulated in order to receive at least partial payment. Build Group has not responded to multiple requests for comment.
For his part, Jonathan Katz-Moses said he’s dismayed by how his agreement with the Bay Area outfit has played out. “It’s disappointing that such a landmark project for the local community was awarded to so many out-of-town contractors, and the few local people who were chosen have to fight for their money,” he said. Not having the $55,000 he’s owed is negatively affecting his business and its 45 local employees, he said.
Also named in the lawsuit is Alma del Pueblo development company Victoria Street Partners. But Victoria Street operator Marge Cafarelli dismissed the case as a dispute between “a disgruntled subcontractor” and Build Group, explaining the San Francisco firm is contractually obligated to protect her and her company from any such filings or related liens. Cafarelli and her attorney, Pete Ryan, said they couldn’t speak to any cash issues Build Group may be having and weren’t privy to the back-charges. Final close-outs of big mixed-use projects inherently “messy,” but it’s up to Build Group to make sure all its subcontractors are paid, they said.
Of Victoria Street’s obligations to Build Group, Cafarelli assured that “there’s money to pay everybody” and that her construction loan is in good standing. “It’s really much ado about nothing,” concurred Ryan of the final steps that need to be taken before the project is financially finalized on their end. Cafarelli said four of Alma del Pueblo’s 32 market-rate condos — originally listed from $840,000 to $2.6 million — have closed escrow with one of the complex’s five middle-income units closing late last week. Each sale has come with a clean title and only one slightly below asking price. “Our sales success has been excellent,” she said.