A panel of arbitrators has ordered Woodside homeowner and venture capitalist Jeff Drazan and his wife Stacy Drazan to pay Palo Alto-based housing contractor Vance Brown Corp. a total of $5.75 million in a dispute over a construction project on an $18 million home on Bridle Lane in Woodside.
The three arbitrators concluded, after 51 days of hearings, that the couple's excessive number of changes to the home's design and the failure to pay the costs associated with those changes was a "material breach" of a contract, according to a Sept. 7 statement from contractor Loren Brown.
While the case actually concluded in February, Mr. Brown said he was waiting for the dust to settle before making news of the award. "You never really know when the thing is over," he said.
The Drazans' attorney, Dan Alberti of Palo Alto-based McDermott, Will & Emory, said that the Drazans "desperately needed to be in front of a jury" but that Vance Brown fought for two years to keep the case out of a courtroom.
An appellate court panel of three judges eventually ordered the case into arbitration, overturning a recommendation for a jury trial on two occasions in San Mateo County Superior Court and once by an earlier and different three-judge appellate panel, Mr. Alberti said.
The arbitration panel, Mr. Alberti said, consisted of three retired construction lawyers. "From the outset, the deck was stacked against the homeowner," Mr. Alberti said. "It was just banging your head against a wall."
Under the rules of arbitration, lawyers from both sides said, the decision can be appealed only if there is proof of fraud on the panel. Unlike a trial, legal and factual errors during the proceedings are not a basis for appeal.
The award included payment of $2.5 million for Vance Brown's attorney fees, about $2.5 million spent by the contractor that the Drazans "refused to pay for," and another $663,300 in attorney fees during the years that the case was in court, said Vance Brown attorney Gregg Dulik of the San Francisco law firm Sedgwick, Detert, Moran and Arnold.
The couple have paid "every penny," Mr. Dulik said.
"It's a spectacular house," he added. "It was just a nightmare getting it built for them." Had the couple not paid up, Vance Brown could have put the finished $18 million home up for auction to recoup its costs, Mr. Dulik said.
After the award had been granted, Vance Brown took the case back to Superior Court to get the decision "confirmed," which allowed the contractor to put the Drazans' house up for auction should there be difficulty in getting payment, according to the lawyers for both sides.
The couple's own outlay for attorneys was about $3.75 million for the arbitration part of the proceedings, and that was on top of what they paid during the court proceedings, Mr. Dulik said.