Failure to use American steel will cost a Fresno contractor $142,000.

Recent court documents show that Sebastian reached a settlement with the city of Fresno — but not without bumps and bruises along the way.

Sebastian won a $1.1 million contract from the city in 2018 — on a 5-2 vote from the city council — to improve light poles north of downtown Fresno. Because the project used federal funds, Sebastian had to comply with the “Buy American” program, which meant it needed to use American-made steel.

Only after Sebastian installed the poles, did the city realize that the contractor did not comply with the “Buy American” rules. In court documents, Sebastian admitted to using Chinese-made steel.

The city sued Sebastian for breach of contract in 2023. Sebastian countersued and demanded the city pay what the company said it was owed — more than $180,000. Both blamed each other for the mishap.

After a failed first round of negotiations and a recent court ruling in the city’s favor, the city will receive the $142,000 settlement.

“I am appreciative of the Court’s ruling in making the City whole,” Fresno City Attorney Andrew Janz said.

Sebastian attorney Matthew Quall declined to comment.

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Chinese Poles Used Instead

The contract called for Sebastian to upgrade 62 light poles on Blackstone Avenue and Abby Street between Divisadero Street and Shields Avenue.

The company finished the project in 2020. When the city discovered Sebastian failed to use the correct steel,  it withheld $180,981. That included more than $53,000 for the project and $74,000 in penalties.

Sebastian’s countersuit sought the same $180,981 in damages. It said it completed the work and should get paid the full amount.

“When the CITY requested (certificates of compliance) for the poles after installation, SEBASTIAN realized there was an issue with the poles meeting the Buy America requirements set forth in the specifications. There is no evidence that SEBASTIAN intentionally failed to comply with the Buy America requirements. The difference in cost of the installed poles from China was insignificant compared to the American made poles and failure to adhere to the Buy America requirements, if any there were, was unintentional,” Sebastian’s countersuit said.

By not completing the project, the city said in court documents, it risked losing $1.75 million in federal grants. It would cost the city more than $274,000 to install compliant poles.

William Barcus, president of Sebastian’s parent company, said the city should have done more.

“The CITY had an independent obligation to ensure the light poles were compliant,” he wrote in a court declaration.

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A Settlement Offer That Wasn’t

In February 2024, attorneys for Sebastian offered a $142,000 settlement. The city accepted.

But then Sebastian did not follow through. In emails between the attorneys, Sebastian said that settlement offer should be applied as a credit to the $180,981 it felt the city owed. The city refused to accept that premise and was going to take Sebastian to court to enforce the original offer.

Quall said he started representing Sebastian after negotiations started. In court documents, he said he “was not fully informed” of previous negotiations.

“I am informed and believe and thereon allege that those prior negotiations never entailed SEBASTIAN giving up the entirety of the Contract Balance and paying an additional $142,000 to the CITY — a clear and unwarranted windfall to the CITY contrary to all prior settlement and negotiation discussions,” Quall wrote.

A tentative ruling from the judge sided with the city. Sebastian did not contest the ruling at an Aug. 1 hearing. Thus, the settlement for $142,000 remains.

Judge Jonathan Skiles wrote that it was an “unfounded belief that the Settlement Offer included offsets and required the City, rather than Sebastian, to pay is not proper basis for setting aside the clear terms of the Settlement Agreement.”

The ruling also dismissed Sebastian’s counter lawsuit. Each side will bear its own attorney fees and costs.