North Union Street construction

Workers continue construction for the Walkable Olean project at the roundabout at State and Union streets on Aug. 29, 2016. 

LITTLE VALLEY — Two firms seek legal recourse for bills from the Walkable Olean project, and city officials claim that double billing is the primary cause.

Mayor Bill Aiello offered some comments on the case of Concrete Applied Technologies Corp. of Alden over a $287,000 lawsuit regarding the final work on the $9 million North Union Street overhaul completed in 2016, as well as a $8,000 claim by supervising engineering firm Hatch Mott MacDonald for a 2017 bill. However, Aiello declined to go in-depth on the suits, noting the city is preparing its formal responses.

“We are waiting for the insurance company to get back to us,” he said, as the city’s insurance could possibly cover some of the costs. However, the mayor stated that “we will be defending it vigorously.”

The CATCO lawsuit was filed Jan. 17 in New York Supreme Court in Little Valley, with the city receiving notification on Feb. 6. The suit by Hatch Mott MacDonald was filed Dec. 20 in the same court.

CATCO officials could not be reached for comment, but the verified complaint filed in court claims that the firm “fully performed pursuant to the terms and conditions of the Contract, including performing additional work that Defendants and their authorized representatives directed Plaintiff to perform.”

The firm claims the city breached its contract with CATCO by not paying the 20th estimate — a bill for the final stages of construction including finishing work and additional repairs to several parts of the project, including curb removals, regrading a rain garden and sewer lateral repairs.

CATCO also claims it has a cause of action under the legal principle of quantum meruit — Latin for "what one has earned." Essentially, the firm claims that even if the work performed was not part of the original contract, the city owes because it benefited from the work by CATCO.

Thirdly, the firm also claims the city was unjustly enriched by the work by accepting the labor, materials and services without offering payment.

The original bid was for $7.79 million, but change orders for additional work including rain gardens along the stretch ballooned the cost to date to $9.03 million, not including the additional work now being disputed.

The majority of the project was funded by a $6.5 million federal Transportation Investment Generating Economic Recovery grant, while the rain gardens were funded through a $865,000 Green Innovation Grant. City officials originally planned to cover $1.5 million of the project through the city’s general funds, but more than $600,000 was added to that in April when the Common Council chose to use a combination of fund balance and a five-year bond to cover the judgement.

Following a year of discord over the penultimate bill for the work — amounting to almost $900,000 — Judge Jeremiah Moriarty ordered the city in April to pay Estimate No. 19, as well as interest. In addition, he ordered the city, within 30 days, have engineers prepare the final estimate for CATCO.

In the beginning of August, CATCO moved for an order of contempt against the city for not complying with the order because Hatch Mott MacDonald engineers had not prepared the final estimate. On Aug. 14 — two days before the motion was to go before a judge — the final estimate was received by the city and submitted to CATCO. In the estimate, engineers recommended that none of the submitted expenses from the contractor be approved.

A notice of claim was served Oct. 24, with the lawsuit being filed Jan. 16. City officials were notified by a process server on Feb. 6.

In April, Aiello noted that CATCO was claiming another roughly $285,000 in costs would be included in a final bill, which the court ordered be completed in 30 days.

“Hatch Mott MacDonald has not signed off on that because they’re not sure it’s accurate,” Aiello said at the time. “No one — neither Hatch Mott MacDonald or the city — has signed off.”

He said engineers had concerns over double billing for some entries in the final estimate and work that may never have been completed, and a solution still needed to be found.

Aiello said Friday that is still the primary concern.

“We don’t feel we owe it,” he said.

IN THE FIRST LAWSUIT, CATCO lawyers contended that the city had not paid for any work performed between Nov. 30, 2016 — after the ribbon cutting for phase one of the Walkable Olean project — until March 22, 2017. The bill was submitted to the city by engineering firm Hatch Mott MacDonald, which had been hired to track Catco’s progress and act as project oversight, on April 6, 2017. City officials challenged the estimate over concerns including workmanship.

Additionally, issues with meeting goals for the state’s Disadvantaged Business Enterprise program were part of the city’s reasoning for not paying the bill. CATCO was unable to ensure that 10.84 percent of federal dollars spent on the project included businesses in which women and minorities have a controlling stake — CATCO owner Mike Salvador earlier said one of his female-led suppliers left business during the project due to a family medical emergency — and was not approved for a waiver from the state program. The issue resulted in the contractor losing its certification, shutting down construction temporarily in September 2016 just before the ribbon cutting.

Leadership issues appeared to exacerbate the dispute. Issues were compounded by changes in leadership at the DPW. Former Director Tom Windus resigned at the end of April, with the bill being due May 22. He was not replaced until September. Aiello said also that Hatch Mott MacDonald sent the supervising engineers to other projects, which made working out the estimate difficult.

Hatch Mott Macdonald in its suit reported that “the nature of this action is the recovery of $7,965.26 in unpaid professional services rendered by plaintiff to defendant.” The firm also seeks interest accrued since its Sept. 8, 2017, issuance, as well as legal fees.

“There’s issues there, too,” Aiello said, noting the bill came in almost a year after the ribbon was cut on the project and the long delays between work being done and receiving the final two estimates.

(Contact reporter-editor Bob Clark at bclark@oleantimesherald.com. Follow him on Twitter, @OTHBob)

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