Contractor Stands To Get About $2.8 Million From City

An appellate court this week upheld a multi-million tort claim against Coeur d’Alene - the largest ever in the memory of city officials.

The 9th Circuit Court of Appeals upheld a lower court ruling that found the city illegally broke its contract with Construct Tech Inc., a contractor for the city’s wastewater treatment plant expansion.

The higher court modified the award to Construct Tech, however, reducing it from approximately $3.3 million to $2.8 million.

“They upheld the underlying liability and the jury’s finding that there was a scheme to get Construct Tech off the job,” said John Black, Construct Tech’s attorney.

By firing Construct Tech in 1992, the city put Construct Tech out of business, Black successfully argued in court.

The appellate court reduced the amount awarded to Construct Tech because it was trying to collect for the destruction of its business and lost profit. The court said Construct Tech could not collect for both, since lost profit was included in the destruction of its business.

Unless the City Council decides to appeal the decision to the U.S. Supreme Court, the city now must pay Construct Tech.

Mayor Al Hassell said he was happy that the city got the amount reduced.

The city will pay the judgment from a self-insurance fund and $2 million from the city’s wastewater fund. The wastewater fund will eventually pay back the insurance fund for the entire amount of the judgment, said city Treasurer John Austin.

It’s doubtful that the city will raise sewer rates or capitalization fees to make up the loss, Austin said.

“I feel we can do it under our current rate structure, or close to it,” he said.

The other result of the lawsuit will be a difference in the way the city approaches future capital projects.

“It puts a lot more burden on the city,” Hassell said. “It makes you responsible for the management of companies that will do your work.”

Construct Tech had been hired as the low bidder in a $6.3 million expansion of the sewage treatment plant.

The city cited defective workmanship, poor planning and violation of state and federal laws when it ordered the contractor to stop work. The first stop-work order came after the city discovered that Construct Tech was operating without an Idaho contractor’s license.

Construct Tech’s attorneys believe the city was looking for excuses to break the contract unjustifiably.

, DataTimes