County appealing judge’s $769,172 award to company in lawsuit over drilling under Intracoastal Waterway for Siesta Key Master Pump Station project

Circuit Court judge ruled that county staff’s efforts to appease homeowner who suffered property damage led to three-month work stoppage

Crew members take a break in early December 2016 in Siesta Cove, as drilling was underway in the Intracoastal Waterway. File photo

In August 2016, the owner of a Siesta Cove home discovered a hairline crack in the wall of his garage. The damage occurred as a contractor was working on the first phase of a Sarasota County project designed to install a new water line and a new sewer force main between Siesta Key and the mainland.

The primary goal of the work was the decommissioning of the Siesta Key Wastewater Treatment Plant and transformation of that facility into a master pump station.

The county’s construction project manager, Jack Gibson, told The Sarasota News Leader in early November 2016 that staff called an immediate halt to the project after the crack appeared.

An Aug. 12, 2016 email blast to residents who had registered for updates said, “Geotechnical and vibration monitoring has begun around Siesta Cove Drive cul-de-sac.”

Staff had been working to determine exactly what happened, Gibson said during a telephone interview. “They hit some really hard material,” he said of the crew members, before they were able to drill under the Intracoastal Waterway.

The work finally resumed — about three months later — and the project was completed. As of April 20, 2018, all of Siesta Key’s wastewater was flowing off the island for treatment on the mainland.

However, on June 24, 2019, the contractor, Southern Underground Industries Inc. of Pompano Beach, filed suit against the county for breach of contract, seeking damages of more than $15,000.

An aerial view shows the Kramer property in Siesta Cove, outlined in red. Image courtesy Sarasota County Property Appraiser William Furst

Southern Underground pointed out in its complaint that, on April 5, 2016, it entered into a $4,370,000.01 contract with the county to handle the installation of the sewer force main and the water main. “Southern satisfactorily performed its work on the Project pursuant to the Contract,” the complaint said. Yet, “Amounts are due to Southern which remain unpaid by the County,” the complaint added.

The company contended that it was owed $638,794.10. After a bench trial in June, 12th Judicial Circuit Court Judge Hunter W. Carroll determined that the total the county should pay Southern Underground is $769,172.

“There is no evidence,” Carroll pointed out in his final ruling, that the company “violated in any substantial way any provision” of its contract with the county.

In fact, he laid blame on the county for the three-month-long work stoppage. During that time, Carroll explained, county staff was trying to appease the owner of the damaged garage — Frank Kramer — for fear that Kramer’s influence with his neighbors would derail the work in Siesta Cove and jeopardize the county’s ability to meet a June 2018 Consent Order deadline the Florida Department of Environmental Protection had set for cessation of wastewater treatment at the Siesta facility.

‘A misunderstanding’

The lawsuit, Carroll wrote, “has its origins in a misunderstanding between Stantec [a Sarasota consulting firm] and the County during the design phase of this Project.”

Circuit Judge Hunter Carroll. Image courtesy 12th Judicial Circuit website

Carroll concluded in his amended final judgment in the case, “There was no reasonable probability to avoid some cosmetic damage to the [Siesta Cove] residence by the drilling activities,” as the county and Stantec “were using a narrow easement between two homes to access the Intracoastal Waterway with the drilling operations virtually at the foot of the Kramers’ driveway. [The Kramers live at 5428 Siesta Cove Drive, according to a county document.] There should have been a better understanding between Stantec and the County about the likelihood of cosmetic damage from drilling activities, especially where — as here — one homeowner could essentially seek to stop drilling,” Carroll added.

Southern Underground “quickly agreed to fix the damage [to the house] when drilling was complete and took all reasonable steps to further ensure the safety of the Kramers and the structural integrity of their home,” Carroll wrote. (In fact, he noted later in his order, on April 27, 2020, Southern Underground reached a $130,000 settlement with the Kramers, “which secured a release” in favor of Southern; its subcontractor, Centerline; and the county.)

The company also “appropriately sought to restart drilling,” Carroll wrote. However, he added, the county did not allow Southern to begin work again for about three months.

The real reason the work stoppage continued for that long a period? “The Court understands that County staff and Stantec were attempting to placate the Kramers and avoid litigation with them,” Carroll wrote in his final order.

“And the Court applauds the efforts County staff made to defuse the situation with the Kramers,” he continued. “Ironically, though, it is those very communications during the three-month hiatus discussing ‘optics,’ ‘getting elected officials involved, ‘media inquiries,’ and similar ‘concerns’ that help show the continuation of the initial stop work order was not based on a contractually valid justification,” Carroll added.

“A November 2016 internal County briefing memorandum” — which summed up the situation as of that time, he noted — said that Kramer was president of the Siesta Cove Homeowners Association, so Kramer’s comments about the issues “could potentially turn an already invasive project within [this] small neighborhood into one with more public conflict than necessary. Additionally, the Kramers have stated that they are seeking legal consultation.”

(The Kramers’ property had a market value of $2,422,500 in 2016, Sarasota County Property Appraiser’s Office records show.)

“Interestingly,” Carroll continued, “nothing in this two-page, single spaced, small-font [internal county] document … discussed any activity [Southern] needed to take to meet its contractual obligations so that drilling could recommence. That speaks volumes.”

This aerial map shows the Kramer property in Siesta Cove (lower right, outlined in red) and the site of what is now the Siesta Key Master Pump Station on the Grand Canal, northwest of Glebe Park (upper left). Image from Google Maps

He added, “The County’s true motivation behind the extended stoppage of work had nothing to do with requiring compliance with [an article] of the Contract.”

As a result, Carroll ordered that the county owed Southern Underground the $769,172, “with an initial annual interest of 6.03%, as provided for by state statute. That interest rate is adjusted each year, the ruling noted.

In a June 30 memo to the County Commission, County Attorney Frederick “Rick” Elbrecht noted that the interest would accrue at a rate of $134.14 per day. He also pointed out that the county was liable for up to $30,000 in litigation expenses, based on Carroll’s ruling.

On July 7, Elbrecht told the commissioners that he and his staff, “respectfully disagree” with portions of Carroll’s ruling. Therefore, Elbrecht sought the board’s approval to file an appeal.

On a motion by Commissioner Nancy Detert, seconded by Commissioner Alan Maio, the board members voted unanimously to grant that request.

No board members offered comments, as is typical when litigation is underway.

On Aug. 21, Assistant County Attorney Bora S. Kayan filed the notice of appeal with Florida’s Second District Court of Appeal.

The same day, Southern Underground filed a notice of cross appeal.

Elbrecht wrote in the June 30 memo that staff expected the appeal would take about a year.

County Attorney Frederick ‘Rick’ Elbrecht. File image

Details of the original complaint

In filing suit against the county, Southern Underground contended that county staff changed certain facets of the pipeline installation project after it was underway and added others without compensating the company “or providing proper time extensions,” its complaint said.

In the county’s response, Assistant County Attorney Kayan pointed out, “The entire contents of the contract speak for themselves.” Further, Kayan alleged that Southern Underground was negligent and thus was responsible for any of the damages it contended that it had sustained. Further, he indicated that other parties were negligent, including Stantec.

On June 12, when Carroll ruled in favor of Southern Underground, he explained that Stantec designed the project so the water main and sewer force main would come onto Siesta Key at the Siesta Cove Drive cul-de-sac adjacent to the Kramer residence.

Carroll added, “To reach the Intracoastal Waterway from the entry point, the mains would traverse through a narrow, 15-foot County utility easement with the Kramer residence just to the north and another house just to the south. From there, the pipes would be laid in an east-southeasterly direction under the Intracoastal Waterway spanning more than 3,000 linear feet, then under County-owned Phillippi Estate Park for more than 800 linear feet, and then under U.S. 41 for nearly 400 linear feet, and then terminating on the eastern side of U.S. 41 near the intersection of U.S. 41 and Constitution Avenue.”

An exhibit entered into evidence in the trial, Carroll continued, provided an accurate depiction of the 15-foot easement, “the nearness of the homes, and the required path to the Intracoastal Waterway. The garage attached to the Kramer residence extends to, and sits on, the easement boundary.”

An addendum to the county’s contract with Southern established a threshold value and a shutdown value “for both vibration and noise,” Carroll added. “This lawsuit involves vibration.”

A graphic in the county’s solicitation package for Phase 3 of the Siesta Key Master Pump Station work shows the route of the sewer pipeline in Siesta Isles, after the drilling was completed under the Intracoastal Waterway. Image courtesy Sarasota County

“The driller had a tight area in which to operate between two homes with virtually no open space between them,” Carroll pointed out. “The piping would pass approximately 5 feet from the plane of the Kramer garage. “There was no reasonable probability that no damage to the structure would occur.”

He also noted, “Although this lawsuit does not adjudicate the dispute between Stantec and the County, it appears Stantec did not advise the County at that time that minor, cosmetic damage likely would occur during the drilling near the entry site.”

Southern Underground subcontracted with Centerline Directional Drilling Service Inc., Carroll continued. Both companies ‘were concerned about the drilling near the Kramer residence, believing this to be the most difficult portion of Phase 1 [of the project].”

Although he concluded that the county’s original, August 2016 stop work order “was contractually permitted,” Carroll added, “there was no further justification” for the work stoppage to continue after Sept. 14, 2016, following resolution of the potential safety issue. Yet, he pointed out, the county did not allow Southern to proceed again until Nov. 28, 2016.

“The County breached its contract and is liable to [Southern] for damages,” Carroll wrote. “None of the County’s defenses preclude that damage award.”