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Wednesday, 17 August 2011 13:22

Haywood must pay up for firing courthouse contractor

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Haywood County is on the hook for $700,000 after an arbitration panel found the county wrongfully fired the contractor overseeing renovations to the historic courthouse four years ago.

The contractor sued the county for $2.3 million after being fired from the job. The county claimed the contractor was “significantly behind schedule” and was “incapable” of finishing the job they were hired to do.

Meanwhile, KMD Construction claimed it was working off inaccurate blueprints. As a result, the project took a lot longer than expected, and was more expensive.

The county refused to pay for cost overruns, however. KMD says it was left holding the bag and wants the county to pay up. The suit cites wrongful termination by the county and negligence by the county’s architect.

A panel of three arbitrators versed in construction and contract law heard the case this summer, but just issued their decision last week to award KMD damages.

Steven Smith, the attorney for KMD, said the decision proves the contractor was in fact not doing faulty work, despite repeated public criticism by the county accusing KMD of shoddy work.

“I think this vindicates them. I think this exonerates KMD,” Smith said.

The firm won money for change orders the county had never paid for and the unpaid balance on their contract, money the county withheld for work that was in fact completed, plus interest.

The county isn’t pleased about paying up, but isn’t totally surprised either.

“We anticipated we were going to have to pay something,” said Commissioner Kirk Kirkpatrick.

The county had withheld more than $400,000 from what it owed the contractor, citing substandard performance and costs incurred by the county due to the rigmarole.

That money is still set aside, so coming up with the payment won’t be as bad as it sounds. That said, the county would have liked to come out a little better in the arbitration than it did.

“The award was probably more than what we anticipated, but it is obviously much less than what they ever offered to settle for,” Kirkpatrick said. The county attempted to negotiate a settlement but could not talk KMD below $2.3 million, Kirkpatrick said.

In addition to the monetary award, the arbitration panel found that KMD had been wrongfully fired by the county.

Smith said KMD was most excited about that.

“Anytime they did a public bid on a project they had to disclose they had been terminated from a public project and that is huge,” Smith said. “That is like a death sentence.”

Smith said the real issues with the job lay with the architect, which had faulty plans and provided inadequate design direction. But the architect, which apparently had the county’s ear, would blame the contractor.

“I think it is really unfortunate the county didn’t recognize from the outset this is the architect’s fault,” Smith said. “I think they were misled or at least the architects chose to eliminate certain details from the critical decision making process.”

Haywood County commissioners are now deciding whether to go after the architect of the job. They will weigh how much it would cost to sue the architect versus how much they could feasibly recover.

Legal fees have already proved a costly proposition.

The county spent more than $400,000 defending the lawsuit by the contractor.

Kirkpatrick said the county thought long and hard before firing KMD from the job, knowing that a lawsuit wouldn’t be out of the question.

By the same token, the county was paying rent to house its administrative offices elsewhere while work on the courthouse dragged on and on. And, the most important thing was that work would be done properly.

“It was a priority to make sure it was done in a manner the people of the county could be proud of,” Kirkpatrick said. “You certainly don’t want to screw up a building that had been there since the 1930s.”

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