Puyallup would be left holding the bag after lawsuit, lawyer tells city council
Somehow, in a seemingly routine effort to widen six blocks of pavement, the City of Puyallup successfully punched itself in the face.
Instead of completing the widening of 39th Avenue Southwest in a projected eight months starting in late 2015, the city took almost two years and potentially doubled its costs.
The project near the South Hill Mall was supposed to be finished in summer 2016, but the city fired its contractor, Ridgefield-based Conway Construction Co., suspended work for months, hired a new contractor and wound up paying for project fixes that Conway had offered to complete at no cost.
The road being rebuilt stretches from 11th Street Southwest to 17th Street Southwest.
The original contract called for replacing and expanding the roadway surface and sidewalk, expanding turn lanes and installing new traffic signals.
Drivers who fumed at being channeled into a maze of traffic cones and two single lanes of traffic throughout 2016 fumed again through much of this year. Adjoining businesses worried about the continuing limited access and loss of customers.
Stories in The News Tribune referred to the project as “stalled” and “troubled,” while city leaders acknowledged that residents were calling to complain.
“This is something that we don’t want to do lightly,” Mayor John Hopkins said last year, when asked about the project and the decision to fire the contractor. “But it’s something we leave to the best judgment of our professional staff.”
Instead of paying an estimated $3.86 million for the project, the city’s costs could climb to $6 million or more, thanks to a recent ruling in Pierce County Superior Court, reached after Conway sued the city over being fired.
“I really do not know who drove the decision-making,” said Joe Straus, the attorney representing Conway in a lawsuit filed against the city more than a year ago.
The News Tribune sought comment from City Manager Kevin Yamamoto regarding the case, as well as from Hopkins, who did not respond to phone calls. Yamamoto referred questions to city spokeswoman Brenda Fritsvold, who responded via email.
“This matter remains a pending litigation before the trial court, and it would be premature for us to comment as the case has not yet been resolved,” Fritsvold wrote. “Given that the findings and conclusions were entered just last week, we have not yet had an opportunity to brief the City Council with respect to those.”
The recent findings by Judge Stan Rumbaugh cover 20 sternly worded pages. His ruling notes the city terminated the contract with Conway for convenience rather than good cause, as the city had claimed.
The legal distinction is important: in blunt terms, it’s the reason the city faces additional costs that could exceed $2 million.
By trying to blame Conway legally (“cause”), the city bet on the chance of recovering its costs. The finding of convenience kills that option, and allows Conway to seek repayment.
“That’s obviously the gamble the city has made,” Straus said. “That to me is the damage to the taxpayers. A project that would have cost no more than $3.8 million is gonna cost double that, if not more.”
To date, the city has paid $500,000 for outside legal help in the lawsuit — numbers that could rise if the city appeals.
The loss on the convenience versus cause point allows Conway to seek more money for work it says the city never paid for. That claim, still being argued, amounts to $880,000. Apart from that, Straus and his legal team intend to seek their own attorney fees, which now stand at $850,000.
One of Rumbaugh’s findings refers to a unique feature of the project: “pervious” concrete, an eco-friendly mix designed to drain more efficiently and reduce the need for additional storm drainage.
According to court records, use of the permeable concrete at 39th Avenue represented its first installation on a major roadway in the United States.
One of the city’s complaints held that 34 of the pervious concrete panels were defective. Conway’s subcontractor offered to replace the panels for free, according to court records. The city refused, but its new contractor hired the same subcontractor that had worked for Conway. The 34 concrete panels were replaced this spring, at public expense.
“The cure came nearly a year after it could have been achieved,” Rumbaugh said in his findings. “(The subcontractor) got paid for that work at significant taxpayer expense when it had offered to do it in March of 2016 for free.”
The city can’t say it wasn’t warned. On May 10, 2016, Straus stood before City Council members during their regular meeting, told them of the lawsuit, suggested the city’s effort to blame Conway might fail and urged members to negotiate rather than fight.
A loss would mean “the city will not recover penny one from Conway,” Straus said that day. “We are more than willing to sit down and try to reach resolution of this matter to get this project complete.”
Straus’s warning proved prophetic. Rumbaugh sided with the contractor, exposing the city to additional costs.
The judge’s findings add that Mark Palmer, Puyallup’s chief engineer, refused to meet with Conway’s representatives to work through disagreements, sent a letter demanding project corrections under the threat of terminating the contract, then left on vacation, making communication impossible.
Throughout the life of the project, Rumbaugh found, Palmer made little effort to grapple with details. He was warned that terminating the contract was a drastic measure with the potential to spur litigation, court records say. He fired Conway, anyway.
“Mr. Palmer’s attendance at the pre-construction meetings saw him arrive late, and maintain most of his focus on his cell phone,” Rumbaugh wrote, adding a subsequent stinger.
“Mr. Palmer made no effort to personally inform himself with first-hand knowledge about project progress or concerns raised by various individuals and entities connected with the project. ... In short, Mr. Palmer was disengaged with the facts that should have informed his critical decision to terminate Conway.”
Paul Mahoney, a resident and a regular at City Council meetings who has kept half an eye on the 39th Avenue project, summed up the case more bluntly.
“The city just screwed the pooch on that one, as far as I could tell,” he said.