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Local News

Melchiori Construction Prevails in Civil Suit Over Chapala One Project

Jury sides with the company, awarding $5.8 million in damages — the sum of the unpaid bill — plus an estimated $6 million in payment penalties and attorney fees

Melchiori Construction Co. of Santa Barbara prevailed Wednesday in its fight to recoup unpaid funds from the controversial Chapala One project.

A Santa Barbara County Superior Court jury ruled in the company’s favor in the civil suit against Chapala One LLC and owner Don Hughes.

“It was a very good day today for Melchiori Construction,” company attorney Kristine Mollenkopf said.

She said that during the construction of Chapala One, from 2004 to 2008, Melchiori was essentially forced to continue with construction while being underpaid and was eventually unpaid to the tune of $5.8 million.

The project was underfunded, according to Mollenkopf, and Hughes allegedly ordered changes that increased the amount of work, all while reassuring Melchiori that the company would be paid.

The verdict was against Chapala One LLC and Hughes personally for breach of contract and fraud on false promise. Melchiori was awarded $5.8 million in damages, which was the bill unpaid by Hughes, and delayed payment penalties and attorney costs, which are expected to be an additional $6 million.

Several subcontractors were included in the case and settled earlier on in the process, according to Mollenkopf.

The verdict was decided on day 31 of the trial and deliberation in Judge Denise de Bellefeuille’s courtroom.

The Chapala One luxury condos, located at Chapala and Gutierrez streets, are unsold, and the large buildings have prompted a debate over city planning, which included the 45-foot building height limit voter initiative on November 2010’s ballot.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk or @NoozhawkNews. Become a fan of Noozhawk on Facebook.

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