Decision time for Puyallup — cost of troubled road project and lawsuit approach $7 million

A road-widening project on 39th Avenue Southwest near Costco in Puyallup is the subject of a lawsuit that could wind up costing the city $7 million.
A road-widening project on 39th Avenue Southwest near Costco in Puyallup is the subject of a lawsuit that could wind up costing the city $7 million. News Tribune file photo

Attorney Joe Straus will stand before Puyallup City Council members on Tuesday, March 6, and tell them what they already know: He won, they lost and the only issue left to discuss is the price of losing.

Will it be $2.28 million, the expected bill to end a long-running lawsuit over an ill-fated road-widening project? Or will it be more, driven by the legal costs the city would incur for appealing that loss, plus accompanying interest that would mount at the rate of more than $11,000 per month?

Council members have an executive session scheduled for the end of their regular meeting to discuss unspecified litigation. Members and Straus know the litigation in question involves the lawsuit pitting Conway Construction, Straus’s client, against the city.

Whether a decision regarding an appeal will be made Tuesday is unclear, but new council members Jim Kastama and Cynthia Jacobsen, elected last November, believe the public should hear its representatives say so in public and explain their reasons.

“This is going to be taken very seriously,” Kastama said. “Whatever decision is made, it’s going to be something where people will know the opinion of the council.”

The underlying project is the widening of 39th Avenue Southwest, a six-block project near South Hill Mall and Costco that began in late 2015.

It was supposed to take eight months to widen the road from 11th Street Southwest to 17th Street Southwest. Instead it took almost two years, frustrating drivers who spent months navigating traffic cones through the stalled project area, which feeds onto busy intersections by the mall.

Originally budgeted for $3.86 million, the project costs, marred by a contract dispute and the resulting lawsuit, now approach $7 million.

Pierce County Superior Judge Stan Rumbaugh drove the penultimate nail into Puyallup’s fiscal coffin on Feb. 21, ruling that the city owes Conway $1.16 million for wrongfully terminating its construction contract in 2016.

The last element of the lawsuit, a determination regarding attorney fees, is set for March 21. Straus and his law partners plan to seek an additional $1.1 million to cover their costs.

The lawsuit started because the city fired Conway midway through the project in 2016, forcing a work stoppage that halted construction for months. In the interim, the city hired a new contractor and paid the cost of project fixes that Conway had offered to complete for free.

Last fall, in an earlier stage of the lawsuit, Rumbaugh ruled that the city fired Conway for convenience rather than good cause and acted in bad faith. The decision paved the way for the damages award entered in court last month.

In November, the city fired Mark Palmer, its chief engineer and a key player in the legal dispute. According to findings of fact in the court file, Palmer made the decision to fire Conway despite being warned about possible legal repercussions. The court’s findings also noted an appearance of bad faith in Palmer’s actions, adding that he was “disengaged with the facts” related to the project. Attempts to reach Palmer were not successful.

Kastama campaigned for office last year in part on a platform of pushing more accountability in city management and limiting what he sees as an overly litigious culture. He would not say how he intends to vote on a possible appeal of the Conway case, but he wasn’t shy about expressing more general views of it.

“The people in Puyallup are going to pay a heavy fine for how this was handled management-wise,” Kastama said. “It’s time for some big decisions in Puyallup, where we need to go as a community and how we need to be managed. This was a very unfortunate case.”

Councilwoman Jacobsen, who campaigned on similar themes, also declined to say how she was leaning. She wants to hear a thorough briefing first but echoed Kastama’s belief that an appeal decision should rest with the council, and the public should hear the reasoning.

“Light is always good,” she said.

Tallying the total numbers illustrates the domino effect on the city’s coffers. The city had already paid Conway $1.4 million before terminating the contract for the road-widening. It paid another $2.68 million to the second contractor to finish the project.

The unsuccessful fight against Conway’s lawsuit cost an additional $644,000 in legal fees paid to outside attorneys representing the city, according to public records. Adding the damages set by Rumbaugh last month and the likely award of attorney fees leads to the $7 million figure.

Straus said his legal team met with the city’s legal representatives during mediation talks in fall 2016. The case could have settled then at lower cost, he said, but the city refused.

Straus expects to remind the council of those facts when he speaks at Tuesday’s meeting. It will be his second appearance. He spoke to members in May 2016, telling them the lawsuit would be filed and urging them to settle the case quickly.

He’s practiced law since 1982, and he’s been involved in public litigation before. Until the Puyallup case, he had never seen the need to address an elected body in public regarding an active case.

“I’m gonna say, hey, I was here in the spring of 2016, and I told you this was gonna be the result and it was, and you had an opportunity to settle this case twice for less than the amount of the judgment,” Straus said. “Why not just pay the judgment and be done with it?”