County ensnared in lawsuit over historic courthouse renovations

Haywood County is being sued for $2 million by the contractor in charge of renovations to the newly restored historic courthouse.

Haywood County commissioners fired the contractor 18 months into the job, citing serious delays and poor work. The construction company claims it wasn’t their fault, and instead blames the architect for inaccurate blueprints.

The county is meanwhile caught in the middle. If the contractor prevails in its demand for more money, the county would have to pay up then go after the architect to cover the pay-out.

County commissioners have had a rocky relationship with the company, KMD Construction, for much of the project. The county actually fired KMD from the project in May 2008 — 18 months into the job and a month away from the target completion date.

“At that time we had no idea when, how or if they were going to finish this job,” said Bob Menadue, a construction lawyer based in Raleigh who is representing the county in the dispute.

The county had also gotten a tip from a worker on the job that the contractor was cutting corners to save time and money.

“At that point it became a no brainer we had to terminate them,” Meynardie said.

The county had insured the project through a surety bond company, which took over when KMD was fired. The surety company rehired KMD to finish the work, but under a new project manager and with additional oversight by the surety company themselves. Meynardie said it is not unusual for the surety company to bring the same contractor back in.

“They should know the job better than anybody that could be brought in to finish it,” Meynardie said.


Tit for tat

The contractor, KMD Construction, is being represented by Steven Smith, an attorney with Smith, Parson and Vickstrom in Charlotte.

Smith said the architect provided poor blueprints that did not accurately reflect what the job would entail.

“He did not go out there and do an adequate investigation of the building,” Smith said.

Plans called for an addition on the back of the courthouse. The addition would be bolted into a large concrete beam supposedly inside the exterior wall of old courthouse.

“When they opened up the wall, guess what? No concrete beam in the wall. That one example crippled this project,” Smith said.

But the examples don’t stop there, Smith said. The architects also failed to realize that large granite blocks around the base of the courthouse were the structural support for the building — not a veneer — and could not easily be punched through.

Another example: the historic courthouse contained jail cells on the fourth and fifth floor. Plans called for ripping out the jail cells. What no one knew is that the bars for the jail cells ran through the ceiling that separated the fourth and fifth floors, so tearing out the cell bars required tearing out the concrete slab between floors, Smith said.

Smith said there were several show stopper issues that paralyzed the project. The contractor could not move forward without revised plans from the architect and new engineering. But the engineer and the architect were uncooperative, Smith said.

“We either got insufficient guidance or they said, ‘You deal with it,’” Smith said.

As the project got more and more behind schedule, the architects blamed the contractor.

“They were telling the county that we were holding things up, that we were responsible for the delays, when really we were without adequate design guidance and the project could not move forward,” Smith said.

Smith questioned whether the architects purposely drug their feet to hold up the project, since they are paid extra if the project goes over schedule.

The contractor is suing the county for $2 million. Of that, $800,000 is what the contractor claims it lost on the job, while $1.2 million is the profit and overhead KMS should have realized but didn’t.

KMD had to pay the fees for the surety company’s point man supervising the project’s completion, footed the bill for work that went beyond the scope of their original bid, and incurred extra expenses when hiring back subcontractors after the job was put on hold and then resumed.

The contractor also alleges they were wrongfully fired from the job.

Meynardie said the county tried to work with KMD to get the project back on track, but found them uncooperative. Meanwhile, KMD claims they were never given fair warning or a chance to address the county’s issue with their performance.

KMD named the architect and project engineer in the lawsuit as well, but the county is the main target since it holds the contract with KMD and the purse strings for the project.

“The architect and engineer are going to get to stand on the sidelines,” Meynardie said.

The architecture firm, Pearce, Brinkley, Cease and Lee, would not comment for this article.

Meynardie admits the blueprints were not 100 percent accurate.

“But that is not unusual in a renovation project,” Meynardie said. “The whole idea is the contractor and designer work together.”

Meynardie said the contractor plowed ahead on their own in some cases, ripping out structural elements of the building without the architect or engineer’s approval.

“There was a period of time when this building was in danger,” Meynardie said.

The county racked up additional expenses of its own during the drawn out project. It had to pay rent on satellite office space during the renovations, had to pay architects for their additional time and faces a big legal bill. The county withheld payments from the contractor to cover some of the extra costs it incurred as a result of the quagmire. Historic courthouse renovations have cost the county $8.2 million — only a slight cost overrun compared to the original budget of $8.038 million. It would have been more, however, if not for withholding a portion of the contractor’s payment.


The down and dirty

Tension between architects and contractors often goes with the territory. Contractors get frustrated by architects, whose plans on paper don’t always work on the ground. Architects get frustrated with contractors who can’t follow plans correctly and are constantly angling for change orders.

Change orders are the bane of any major construction project. When a contractor encounters added work not reflected in the plans, they ask for a change order outlining the extra work and adding to the project cost. The result is a constant tug of war between architect and contractor.

When competing for a building project, some contractors will underbid in order to score the job, since jobs go to the lowest bidder. The contractor is banking on pushing up the price tag through change orders over the course of construction, however.

Contractors nitpick the architect’s blueprints, claiming the plans were incomplete and that they are performing extra work outside the scope their original bid and thus need more money. The architect meanwhile insists that the plans are indeed accurate, and that the contractor is responsible for delivering the project for the price they promised.

In the end, contractors can come to blows with a hard-nose architect who holds the line on changes orders.

Jack Patterson, a professor in the construction management program at Western Carolina University and a former contractor by trade, said communication between the contractor and architect is vital, especially in renovations.

“One thing we stress with students to alleviate that problem is good communication skills,” Patterson said. “A lot of times the break down is in communication. Sometimes they get so frustrated that neither side is going to budge and there is no line of communication left to try to resolve that problem.”

Patterson also teaches students to do their own due diligence when bidding on a project to uncover hidden issues an architect may not have realized.

“As a contractor, I tried to find any defects in the blueprint or the building at the very beginning and address it before the bids are let,” Patterson said.

While any project — especially a massive renovation of a historic building — has its share of legitimate change orders, it can be difficult to discern which are legitimate and which are part of the game played by contractors to make more money.

“Animosity can be created through that cycle,” Patterson said. “It can get worse because each starts stonewalling the other and you end up in arbitration and along the way the building ends up not getting done. Somewhere down the line, people have to say this is what has happened and what do we need to do to get it done.”

Smith, of course, claims the change orders requested by the contractors were all legitimate. Meynardie said all legitimate change orders were approved.

But Smith said the contractors eventually quit pursuing change orders and just did the work at a loss, with the intention of settling up when the project was over.

“It got to the point with this job where it was clear where the architect had set up his tent,” Smith said.

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