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Construction litigation over jail project continues after 8 years

Often, construction disputes between a builder and an owner can have millions of dollars at stake. This may be especially true if the project is for a government building, such as a jail.

An ill-fated addition to a jail in another state is the subject of a multi-million dollar lawsuit that has been moving through the courts for eight years. The city accuses the construction company of causing about $50 million in cost overruns due to serious problems with the project.

The construction company was hired in 2004 to build an 1,100-bed addition to an existing jail, in exchange for $25 million. During construction, someone discovered cracks in a support beam, forcing work to stop.

A clause in the contract allowed either party to cancel the deal “for convenience,” as opposed to “for cause,” which would require a reason. The city’s Public Building Authority exercised this clause some time after the cracks appeared. However, it claimed that it had the right to change the reason for the termination to “for cause” if it found evidence of poor workmanship. The state Supreme Court later found this was not allowed under the contract.

The jail project was eventually finished, allegedly $50 million over budget. Each side has filed litigation against the other. The PBA claims that the construction company, Dawson General Contractors, is responsible for this extra cost. Dawson counter-sued for $9 million in what it says are unpaid fees.

The parties, along with subcontractors, are using mediation to try to reach a settlement. If the parties cannot settle, the judge presiding over the litigation has set a trial date for October 2015.

Source: Al.com, “8-year-old Madison County Jail construction lawsuit finally set for trial,” Steve Doyle, Sept. 5, 2014