Litigation result of early wastewater dispute with contractor
The City of Marathon has agreed to pay Globetec $2.35 million over a lawsuit filed in 2012 relating to the city’s early efforts to sewer. In addition, co-defendant Weiler Engineering and the Wieler’s city liaison, Edward Castle, will pay $650,000.
The agreement was made in October and approved without discussion on the consent agenda at the Dec. 18 meeting of the Marathon City Council.
The disagreement stems from work done before 2010. Weiler Engineering was hired to design, administer and inspect the sewer installation, while Globetec was hired to do construction of part of the system on a $30-million-plus contract. When the final bill came due it included about 30 items the city disputed, either because they were change orders the city said were never approved, or included features not in the original plans. The cost overruns added up to millions of dollars.
“It was a bitter pill for us to swallow,” said Councilman Richard Keating who sat at the mediation table. “But if we went to court, and they were awarded any kind of settlement, the city would have then been responsible for their attorney fees. The risk to the city was tremendous, but the settlement was a compromise on both sides.”
The final settlement of $2.35 million was negotiated down from the starting price somewhere in excess of $8 million.
City of Marathon Finance Director Jennifer Johnson said the settlement monies were set aside years ago in preparation for this moment. The city’s $2.35 million was paid on Nov. 30 with funds from a state revolving fund loan that also paid for the construction of the waste and stormwater system.
Officials have said that the $2.3 million settlement is within reason on two fronts: one, it ends the litigation; and, two, it’s a small ratio of the total funds spent to sewer Marathon.
“When you are talking about a $100 million project like the sewer installation, there’s going to be some type of disagreement when the final bills are presented,” said Mayor Chris Bull. “So we had some mediation of what we thought happened, what Globetec thought happened and what Weiler thought happened.”
All three parties — the City of Marathon, Weiler Engineering and Globetec — have agreed to pay their own attorney fees and a one-third share of the cost of the mediator. Marathon officials estimate the city spent $400,000 on its own legal bill.
In addition, Marathon has agreed to waive and release Weiler Engineering from any claims for contribution of indemnity, contractual or common law action out of the plaintiff’s claims.
The agreement also stipulates that if Weiler Engineering defaults on the financial obligation ($650,000), then the company “admit[s] to liability for all claims of professional negligence as asserted by Plaintiff …”