Legal disputes over contract changes in public construction projects

Construction Cases

Thousand Oaks vs. Amelco Electric

Broward County Vs. Great American Insurance

Great Monument Vs. Pinellas County

Pasco County School Board vs. Norwood Co

Cho Dae Presbyterian Church vs. Norwood County Zoning Board

Lafayette Realty vs. City of Hawthorne

City of Hackesack vs. Bergen County

Construction Cases

City of Thousand Oaks vs. Amelco Electric

Amelco Electric was awarded a contract by the city of Thousand Oaks' to construct the electric portion of the Civic Arts Plaza project. The contract was worth over 6.1 Million Dollars. City representatives paid Amelco $1,009,728 extra to make changes. Amelco committed a faux paus when it failed to utilize the additional funds towards making the new changes as stated. They also claimed that it was difficult to verify the problems as it was impossible. Amelco claimed damages as they believed that the changes were a betrayal of their contract. The management pressed for lost claims for the difference between the actual amount of the bid and its actual costs; which they claimed was due to the changed work's impact on its productivity.

The District Court of Thousand Oaks ruled that Amelco should be paid a substantial cost of the work they had done "so many changes [were] made to the design that the project actually constructed [was] substantially different from the project described in the contract." (Public Construction Law, Cheri De Love, 2003) The district court upheld the trial court's judgment to award Amelco a sum of $2.8 million in damages. This included the interest and attorney fees

Supreme Court panel of Judges in the state of California overturned a decision by a District court which awarded Amelco damages against a public agency. The district court had earlier awarded the contractor damages on the grounds of total cost of computing damages

The Supreme Court overturned the District Court's judgment after examining the case more carefully. They ruled that a public agency is eligible to pay for work which is awarded contrary to a low bid. Further more it is a violation of the construction law to pay for work after a contract is abandoned. The Court held Amelco responsible for the failure to state the point at which changes in the contract were made and trying to recover its costs during the time period of the contract. The ruling stated that Amelco failed to identify when the breaches occurred. This would lead to a lot of public policy concerns because it would allow contractors to claim lost cost charges before a project was completed. Thus after completing a project they could abandon the contract by giving a notice of too many changes in the contract.

The court made a ruling that in order to ensure the maximum amount recovered from a public agency, a contractor should be able to make efforts to recognize the events that caused delays and additional expense. They should also quantify the delays and expenses by their specific event.

Broward County vs. The Great American Insurance Company

Broward County commissioned the Rockland Construction Company, to build a sports complex. The Rockland construction company defaulted on its contract, so the school district demanded

Rockland's surety (The Great American Insurance Company) that they would complete the job. The insurance company made a bid to get a new contractor into a contract with the school district and submit its own, new performance bond. In exchange the school board would release them of their surety. The school district turned down their offer and hired another contractor. They also sued Rockland's Insurance Company for its additional costs.

The Florida court ruled that The Great American Insurance Company did not fulfill its duties under the term of the bond. Even if the company arranged for another contractor to execute the work, it was still responsible for any cost overruns caused by the substitute contractor.

Cho Dae Presbyterian Church vs. Zoning Board, Norwood County

The Cho Dae Presbyterian Church is headed by a Korean congregation. They had filed a lawsuit against the Zoning Board of Norwood County, New Jersey. In a ruling issued by a Supreme Court Judge, the court found in favor of the Plaintiff (Cho Dae Presbyterian Church). The church was battling an effort by the zoning board to stop the construction of a new church.

The church sued the Zoning Board in retaliation after it reversed a decision to allow the church to build on land zoned for light industry. A few residents had objected to the mammoth size of the church and pressed members of the zoning commission to reconsider their decision.

The site for the church was on a vacant plot near the Norwood Industrial Zone. The industrial zone was a good site as it was away from most homes but near downtown. The setup included a large gym, Praying grounds for more than 700 worshippers and a school with 14 classrooms.

The ruling was good news for Cho Dae Presbyterian Church as it prohibited the Zoning board from re evaluating its decision to let the Church start construction.

In ruling on the case Feb. 16, Judge Jonathan N. Harris in Hackensack said the board had been "arbitrary, capricious, and unreasonable" in trying to reopen the matter, and ordered the borough to pay the church's legal fees. (Adam Geller, 2000; Publication: The Record (Bergen County, NJ);)

That was a very strong message," Yoonseop Choi, a deacon at the church, said Thursday, of the judge's ruling. "It's clear we are on board again."(Adam Geller, 2000; Publication: The Record (Bergen County, NJ);)

Though the judgment ruled in favor of the Cho Dae Presbyterian Church, there was still the task of getting a new building plan approved. The new plan would have to explain the details in full. The church agreed to work with the City Officials and trimmed down the size of their building by 10%.

Lafayette Realty vs. City of Hawthorne

Amongst other legal construction lawsuits, one of the most prominent is an 11-year feud between the borough of Hawthorne and a developer, Lafayette Realty. This dispute was brought back to court after the borough challenged the plans of Lafayette Realty

Lafayette Realty wanted to develop a housing scheme consisting of a town house complex and an apartment building for lower middle class people. The borough challenged the scheme by declaring that it would affect a lot of factors such as parking, walls and roads. They claimed that the area was very congested and new developments would cramp the area.

The battle over Lafayette Hills has been running since 1989. One of the master planners appointed by the state Superior Court turned down the conditions imposed by the borough. Most of its opposition came from people who thought that there would be a lot of inaccessibility for vehicle movement. Thus there wouldn't be any room for proper facilities such as waste disposal, etc. Then there were also the environmental factors. Most of the proposed building area lay within the vicinity of wetlands and sloppy areas. It would require a firm nod from the State Environmental Agencies.

Finally after a number of court decisions, the borough reluctantly allowed the development to go ahead as it would help the city of Hawthorne to provide housing for the lower middle class people.

City of Hackensack vs. Bergen County

The city of Hackensack fought a long and lengthy legal battle with Bergen County. Hackensack city was protesting over plans by Bergen County to expand the Bergen City Jail. After a long battle, the court ruled in favor of the expansion. The Supreme Court in state of New Jersey turned down an appeal of a rejection of the suit by a lower court.

The lawsuit had been a bone of contention between the city of Hackensack and the county of Bergen for more than a year and a half. The lawsuit came at the expense of the Hackensack taxpayers. City Officials argued that the site was too small and it would cause an economic downfall. The city mayor also tried to convince the county to shift the site from its proposed location. The city officials turned down the demands as it would be very expensive to relocate the jail as it wasn't acceptable elsewhere. City officials accused the county of going ahead with construction plans without consulting them. They also claimed that the plans of the building were also flawed and not fit to be constructed. However the court rejected all the city's claims and ruled in favor of the county of Bergen.

The planned expansion was said to have cost around $45 million dollars. The ruling came around at the right time when the county officials barged ahead with the planned expansion. The ruling comes as the county forges ahead with the planned $45 million expansion. However it would take around a year to go ahead with the plans. (Hugh R. Morley, The Record, 1995)