Source: http://insurancenewsnet.com, March 10, 2015
By: Keith Eddings, The Eagle-Tribune, North Andover, MA
Lawsuits over the construction of two city schools built as long as 14 years ago are inching through Superior Court, where the city is seeking about $14 million in damages.
One of the jobs — at the Guilmette School, where the city is alleging faulty construction led to a mold infestation that cost $6.5 million to clean up — was done by a company headed by the brother of John Fish, the man leading the effort to bring the Olympics to Boston.
At Lawrence High School, the city is trying to collect for the delays and added costs it said it incurred when the general contractor walked off the construction project in 2006 with $21 million worth of work remaining in its $77 million contract to build the complex of five buildings.
Travelers Casualty and Surety Co. of Hartford, Conn., which guaranteed the job, has filed a counterclaim against the city seeking at least $2.3 million, including $1.3 million worth of change orders it says the city owed the general contractor, Eastern Contractors of Framingham.
The dispute over the high school job dates to Aug. 8, 2006, when Eastern quit after 32 months. Although the six-year clock normally would have run out on the time either side had to file a claim, Lawrence and Travelers agreed to stop the clock in 2008 as they tried to implement an earlier agreement to finish the work.
The agreement called on the city to pay $21 million to a second general contractor hired to complete the work, for which the city would be reimbursed $11 million by Travelers. The agreement left several issues unresolved, including Travelers’ claim for the $1.3 million in unpaid change orders and another $1 million it said the city unilaterally withheld from what it owed.
The city says Eastern and Travelers gave up any claim to the unpaid change orders when Eastern voluntarily walked off the job.
Travelers says insurance companies that take over failing projects are entitled to payments the contractors were owed.
In March 2013, Lawrence canceled the agreement that stopped the clock on the time allowed to file a claim. Three months later, the city sued Travelers for the balance of damages it said it sustained.
Travelers responded by filing its counterclaim for $2.3 million. The company also alleged it was damaged when the city agreed to make payments to Fontaine Brothers Inc., the general contractor that took over the job from Eastern, for amounts that were “incorrect or unreasonably low.”
Lawrence and Travelers are scheduled to complete discovery, where each side takes depositions and seeks records from the other, by June. A decision in the case is expected a year later.
The legal web is even more tangled at the Guilmette School, where the city is suing the general contractor and Travelers to collect at least $6.5 million it said it spent to eradicate a mold infestation discovered in 2010, and to move students and staff to other buildings for most of the school year while much of the building’s interior was demolished and rebuilt. Travelers bought the company that initially insured the $23.3 million construction of the Guilmette School, and so it also is a defendant at Guilmette, as it is in the high school suit.
Peabody Construction, the general contractor at Guilmette, went bankrupt in 2005 and was reorganized in 2011. It’s owned by Ted Fish, whose brother, John, heads Boston 2024, the organization leading the effort to bring the Olympics to Boston. John Fish started his career at Peabody, but left to form Suffolk Construction in the 1980s.
After Lawrence filed its suit against Peabody, the company in turn filed claims against more than a dozen of its subcontractors on the job, including plumbers, electricians, roofers, electricians, insulators and window companies.
The list has been whittled by settlement agreements by Peabody and the subcontractors and by summary judgments issued by Judge Robert Cornetta. The judge found one contractor, Lopez Contracting of Chelsea, in default for failing to respond to the claim Peabody filed against it.
The city is alleging that the mold infestation at Guilmette was caused by shoddy construction practices and defective materials. The heart of the claim alleges that pipes serving the HVAC system were improperly insulated, allowing moisture to collect on the pipes and drip undiscovered for years through the insulation, ceiling tiles and wall boards.
Travelers says the statute of limitations giving the city six years to file the suit has expired; the city says both sides have a separate agreement extending the deadline.
Travelers also says the city released Guilmette’s general contractor from future claims in an earlier settlement over a sprinkler system that burst and cause flooding at the school, which resulted in a smaller mold infestation.
Discovery in the case is continuing. Cornetta is scheduled to rule by October.