A breach of contract lawsuit filed by Rose-Lan Contractors Inc. against Platte City was “dismissed with prejudice” on Dec. 8 by Senior United States District Judge Scott Wright of the Western District of Missouri, St. Joseph Division.
Both parties will assume responsibility for their own legal fees and the term “with prejudice” indicates that neither will be allowed to file the case again.
Mike Callahan, a partner in the construction law practice of Stinson, Morrison and Hecker L.L.P. and attorney for Rose-Lan Contractors, said that the city and Rose-Lan had reached a settlement resolving the dispute and the Rose-Lan dismissed the case in return for payment of roughly $325,000 from the city.
“Damages initially sought exceeded probably north of one million dollars,” said Callahan. “Part of it was the direct impact of the site conditions and part of it was the loss of Rose-Lan’s future business.”
Callahan said that shortly before Thanksgiving, Rose-Lan filed another suit for the remainder of the damages against Bartlett and West, the engineering firm retained by Platte City to compile the original pre-bid documents on which the Rose-Lan price was based.
“That company (Rose-Lan) was essentially put out of business as a result of this job,” said Callahan. “All the employees were let go and I think the owner took an earlier than planned retirement.”
Public records located previously by The Landmark showed Rose-Lan as having carried an annual payroll between $1 and $2.5 million with approximately 20 employees and $6.8 million in sales in 2009.
The original case against the city was filed on Sept. 7, 2010 regarding a dispute over the consistency of the clay in which Rose-Lan had been hired to install 4,500 feet of 24-inch sewer pipe along Platte River between 92 Highway and the sewage treatment plant.
With 500 feet completed, Rose-Lan claimed that the soil in the area was not “fatty clay,” as described in the pre-bid documents, but instead “silty clay” with too much water content. Maintaining that it could not complete or guarantee the work without a change order from the city accommodating both the changes in physical conditions and increased costs of construction, Rose-Lan evacuated the job site in the summer of 2010 after the city declined its change order request on the grounds that the clay was not too wet to continue as originally planned.
City crews led by Public Works Director Leonard Hendricks later successfully installed 602 feet of the sewer pipe and two manholes at a depth of 40 feet or more.
Rose-Lan president Bill Persons was not available for comment on the dismissal of the case but said in a previous interview with The Landmark that he had been advised by the pipe company not to install the pipe in the given conditions.
“I didn’t just walk off (the job),” said Persons. “We had several people look at it before we made that decision. When the pipe company tells you that they don’t want their pipe put in that the way it’s designed, you don’t have much choice.”
Callahan said that with respect to the city, he is glad the case is resolved.
“The city and the taxpayers have better things to do with regard to litigation,” he said.
D.J. Gehrt, city administrator for Platte City, said that now that it is free to continue the sewer line project, and with about half of the work yet to be completed, the city will consider three possible approaches for moving forward.
First, he said, the city can put public works crews back on the job to complete the rest of the project.
“The advantage of that is that we trust the quality of our public works folks,” said Gehrt. “The disadvantage is that it is a relatively large construction project. Although we can and have done construction projects, (our public works department) is not set up to do that.”
It would also take public works crews away from other tasks, he said.
A second option would be to use a “station-to-station bid.” The pipe, Gehrt said, has been completed at both the north and south ends with the middle remaining to be installed so a “station-to-station” bid would entail hiring a second contractor to complete the work as described in the original bid documents.
The third option, said Gehrt, would be to restart the design and bidding processes from scratch as a new job defined as a station-to-station project.
The difference between the second and third options, he explained, is that the second would involve the use of the original plans and specifications while the third would begin the entire process anew as a separate and distinct project.
“One of the issues of this lawsuit with Rose-Lan (was that) Rose-Lan accused the city of not adequately describing the soil conditions,” Gehrt explained. “Since the plans and specifications, and the conditions describing the specifications, were part of the issue, we don’t want to get back into that situation. So we have to be real careful both on the legal and engineering side that everyone is satisfied with those plans and specifications. Obviously if we feel there is a problem, (we can) go through the geo-engineering work again and make sure everyone is extremely comfortable with the conditions we state.”
Gehrt said that the city feels that the fatty clay description was correct but plans to ensure that the same thing cannot happen again.
“We want to make sure that anyone who is moving forward with this project on the contractor side knows what they’re getting into and more importantly does not have a recourse to say that anyone misled them in not adequately describing the soil conditions,” said Gehrt.
Gehrt explained that in fulfillment of American Recovery and Reinvestment Act requirements for the sewer line, Bartlett and West was separately retained as the city’s engineering firm for the project but was, at the same time, contracted as the city’s on-call engineering firm as well.
The city has since contracted with Shafer, Kline and Warren as its on-call engineering service provider, however, while Bartlett and West continues to serve as engineer for the sewer line project.
Gehrt said that if the city were to choose the third option of beginning the project again from scratch, a new request for proposals would go out for a project engineer and, he said, “If Bartlett and West had the best proposal again, they would be selected again.”