City Commission agrees to $626,081.02 settlement with former contractor on Lift Station 87 project

City attorney to propose private session with board members to discuss appeal of Circuit Court judge’s ruling denying city attorneys’ fees related to litigation

The city webpages devoted to the Lift Station 87 project feature an image depicting the facility in Luke Wood Park. Image courtesy City of Sarasota

On the recommendation of Sarasota City Attorney Robert Fournier, the City Commission this week voted unanimously to approve a partial settlement agreement with Westra Construction Corp. of Palmetto and pay the firm $626,081.02 in a case involving the original initiative to construct Lift Station 87.

Additionally, at the request of Commissioner Shelli Freeland Eddie, Fournier agreed that, during the July 15 City Commission meeting, he would make a formal request for a “shade” meeting with the board members to discuss strategies for appeal of the May order 12th Judicial Circuit Court Judge Andrea McHugh issued in the case.

Under the guidelines of the Florida Statutes, local government bodies may meet in private with legal counsel to discuss specific facets related to litigation.

The total settlement with Westra that the commissioners addressed on July 1 reflects taxable costs, pre-judgment interest and some attorneys’ fees, according to a memo Fournier provided the board members in advance of their regular meeting on July 1.

Between June 7 and June 19, Fournier noted in the memo, representatives of the city “participated in a mediation session to determine and negotiate the amount owed by the City to Westra.”

The agreement points out that $363,250 is the amount “in complete settlement of Westra’s claims for costs.” Another $162,831.02 is the pre-judgment interest, the agreement notes, while the final $100,000 is for attorneys’ fees associated with the case.

Circuit Court Judge Andrea McHugh. Image from the 12th Judicial Circuit Court website

According to a document in the case file, Circuit Judge McHugh awarded the attorneys’ fees to Westra in response to motions for sanctions, including contempt of court, for the city’s failure to comply with discovery orders the court had issued.

In her May 17 order, McHugh ruled that the city was not entitled to attorneys’ fees in the case, but Westra was. The city has appealed that decision to Florida’s Second District Court of Appeal.

Writing in that order, McHugh explained, “This is a complex, multi-party construction litigation case involving the design and ultimately unsuccessful construction of an underground lift station at the behest of the City of Sarasota. Just as the design and attempted construction of the lift station spanned a number of years and involved intricate technical and substantive complexities, so did the litigation that came in its aftermath.”

On Feb. 25, 2013, the city filed a complaint against the firm AECOM Technical Services Inc., as well as two engineers with that firm, Craig J. Pajer and Douglas Eckmann, alleging professional negligence.

AECOM then filed a complaint against the city, alleging breach of contract with the city.

“The jury found in favor of … AECOM on the breach of contract count,” McHugh wrote in the May 17 order, “and in favor of the engineers on the professional negligence counts.” However, she continued, “The jury found that AECOM was negligent, and attributed 50% of the negligence as a legal cause to [both] AECOM and the City, and awarded no damages.”

As for AECOM’s suit against the city: “The jury found in favor of the City,” McHugh wrote.

Westra, which was the construction firm the city hired to undertake the original Lift Station 87 project, also filed suit against the city, McHugh explained. It alleged “multiple counts of breach of contract and lost business opportunities.”

During a trial on that complaint, McHugh noted, “The jury returned a verdict finding the City materially breached the contract between Westra and the City, awarding Westra $686,233 in damages.”

In the beginning

The Hudson Bayou bridge was threatened by the original microtunneling plan for Lift Station 87, the city and its current project consultant have pointed out. Image courtesy City of Sarasota

In its 2013 complaint against AECOM — which has offices in Sarasota and St. Petersburg — the city explained that on June 10, 2008, it entered into an agreement with Boyle Engineering Services to handle the design, permitting and pre-construction services for the new Lift Station 87 in Luke Wood Park. That work included the installation of new gravity sewers between Lift Station 7 and Lift Station 87; installing a new force main to connect with existing mains at Hudson and Osprey avenues; abandoning Lift Station 7; and decommissioning the existing Lift Station 71 in Luke Wood Park.

Then AECOM acquired Boyle and assumed the contract.

During the second half of 2008 and the first quarter of 2009, the complaint continued, Boyle/AECOM, through engineer Pajer, prepared various drafts of a Basis of Design Report for the project. The final version of that report — issued April 7, 2009 — “determined that the project, among other elements, would incorporate a gravity system bringing vitrified clay pipe [VCP]… under Hudson Bayou through the use of deep micro-tunneling,” the complaint added.

Although city personnel provided comments on the report, the complaint said, Boyle/AECOM and Pajer “knew the City had no experience with micro-tunneling, let alone micro-tunneling with the use of [vitrified clay pipe].” As a result, the complaint argued, city staff relied upon the firm and Pajer to determine the feasibility of that part of the project.

The complaint said that microtunneling operations require customized specifications, including consideration of “the geotechnical conditions anticipated to be faced at the particular job site,” and that those conditions in Southwest Florida “can vary considerably within the course of even a few miles …” The type of pipe to be used is another important consideration, the complaint argued.

Boyle/AECOM should have ordered a thorough geotechnical analysis “typical for micro-tunneling operations,” the complaint said, but it did not do so. Even if Boyle/AECOM, Pajer and the third defendant — engineer Eckmann — “had been competent to draft a customized micro-tunneling specification, which they were not,” the complaint contended, “their failure to order adequate geotechnical analysis rendered them unable to draft [such a specification for the project].”

Working with Westra

Image from the Westra Construction Corp. homepage

On Feb. 25, 2011, the city and Westra executed a contract for construction of the Lift Station 87 project, according to the complaint Westra filed against the city on May 19, 2014. The city also approved Westra’s use of what it characterized as a “qualified subcontractor to perform the microtunneling specified by the City.” That firm was Huxted, the Westra complaint noted.

The total contract price, the complaint continued, was $9,592,000; the city gave Westra 550 days to reach the point of substantial completion of the project, with another 100 days anticipated for concluding the work.

On March 4, 2011, the complaint continued, the city issued the necessary Notice to Proceed to Westra, which planned to start work on March 28, 2011, with anticipation the project would reach substantial completion on Sept. 28, 2012 and final completion on Jan. 6, 2013.

By September 2011, the complaint pointed out, “Huxted began experiencing cracking in the VCP [vitrified clay pipe] being installed by microtunneling.” The city suspended the work on Sept. 30, 2011, the complaint added. Then, on Oct. 27, 2011, the complaint said, the city “implemented a redesign of the microtunneling portion of the Project,” which called for changes in the process.

Even after the implementation of the changes, the complaint contended, the pipe continued to crack.

“At a meeting held on or about December 13, 2011” among representatives of the city, AECOM, Westra and Huxted, Westra and Huxted “informed the city that the VCP specified by the City was not suitable for the Project,” Westra’s complaint pointed out.

Even the VCP manufacturer, MCP Industries Inc., and the National Clay Pipe Institute stated in December 2011 that the VCP was not suitable for the microtunneling, the complaint continued.

A McKim & Creed consulting firm graphic shown to the City Commission on June 8, 2015 shows the phases of the Lift Station 87 project. Image courtesy City of Sarasota

After further city modification of the design of the project — and further insistence by Westra, MCP Industries and the National Clay Pipe Institute that the VCP was not appropriate for the work, the complaint pointed out — the city issued Westra and Husted another Notice to Proceed on Feb. 2, 2012. On March 22, 2012, the city again directed Westra and Huxted to cease the microtunneling operation, the complaint said. Finally, on March 28, 2012, Huxted pulled out, saying the city “had yet to provide a constructible design for the microtunneling portion of the Work,” as the complaint put it.

More city redesign initiatives ensued, the complaint continued.

Finally, in October 2012, the complaint said, “it was determined that the City’s design was fatally flawed because the microtunnel below Hudson Bayou would hit the Hudson Bayou bridge foundation if the microtunnel was built at the designed elevation.”

Although AECOM “delivered revised plans” to the city on Nov. 1, 2012, the complaint continued, city staff deemed those inadequate to allow for the construction to proceed successfully.

On Nov. 16, 2012, the city terminated its contract with AECOM, “citing woefully lacking engineering investigation and analysis, misguided elevation assumptions, conflicts in the contract documents, a microtunneling specification that was woefully inadequate and poor specifying by the engineers lacking sufficient microtunneling experience,” the complaint said.

Then, on Nov. 21, 2012, the city formally notified Westra that all construction work on the lift station “was indefinitely suspended,” the complaint added.

On Feb. 25, 2013, the city filed its lawsuit against AECOM, as well as Pajer and Eckman “in their individual capacities as licensed professional engineers employed by AECOM, alleging reach of contract and professional negligence,” the Westra complaint said.

Another try

In September 2013, the city entered into a contract with the firm McKim & Creed of Clearwater to redesign the lift station.

Microtunneling under Hudson Bayou had to be planned more deeply than the original firm anticipated, McKim & Creed engineers say. Image courtesy City of Sarasota

After McKim & Creed “dictated that the microtunneling be installed significantly deeper than the original design upon which Westra’s bid had been based,” the complaint continued, Westra informed the city that “the anticipated cost would be significantly higher” than McKim & Creed’s estimate. Westra also said the amount of time needed for the project “would be significantly greater” than McKim & Creed’s expectation.

Additionally, in June 2014, the complaint said, the city notified Westra that it no longer could use Huxted as the microtunneling contractor for the project.

Yet, the complaint pointed out, “Huxted was one of the only qualified microtunneling contractors in the area. The City’s elimination of Huxted as a subcontractor resulted in the pricing for the McKim & Creed redesign being higher than necessary.”

In September 2014, after Westra — at the city’s direction — submitted documentation “seeking an equitable adjustment” to its contract to compensate it for the extra costs associated with the McKim & Creed redesign, the complaint said, the city rejected the request. Instead, the complaint pointed out, “the City unilaterally deleted the microtunneling work from the Contract.”

Conflicts between the city and Westra continued to mount, the complaint explained in detail. On Nov. 21, 2014, the complaint said, “Westra declared the City in material breach of the Contract.”

A graphic shows the area of Luke Wood Park that has been closed for the Lift Station 87 work. Image courtesy City of Sarasota

Then, on Dec. 1, 2014, the complaint continued, the City Commission voted to terminate Westra’s contract “so that the City could seek new bids by Westra’s competitors.”

Under the guidance of McKim & Creed, work has been proceeding on Lift Station 87 in Luke Wood Park. City webpages devoted to the project explain that it “is necessary to improve the wastewater system and mitigate overflows due to aging infrastructure and equipment.” After the facility has been completed, wastewater flow from Lift Station 7 will be redirected to Lift Station 87.

The total estimated cost of the project is $32 million.

The structure in Luke Wood Park is expected to be completed in mid-2020, the city webpages note. The final phase of work will entail pipeline installation. No contract has been executed yet to cover that part of the undertaking.