Riviera Beach, construction firm fight over $4M utility contract


Construction company sues Riviera Beach over firing from $4 million utility contract

Riviera Beach, already dealing with recent council controversies and chaos, is also fending off a $1.5 million lawsuit from a utility contractor, a case the firm says stems from the city’s disarray.

Close Construction LLC of Okeechobee alleges the city breached the firm’s $4 million contract, delayed payments and then fired it for problems caused by the outside engineer the city hired to administer the project, an engineer who doubled his own pay by doing so.

The city contends Close didn’t do what it was paid to do.

SPECIAL REPORT: Riviera leaders big on credit cards, cars and hotels

Add the dispute, in Palm Beach County Circuit Court, to the list of issues Riviera Beach is dealing with including the recent firing of the city manager, vacancies in several high-level posts and a campaign from citizens to recall three council members.

The city contracted with Close, the low bidder, in August 2015 to replace two lift stations, one on Singer Island and one on the mainland. The stations are systems of pumps and pipes that send sewage under the Intracoastal Waterway and on to the East Coast Regional Water Reclamation Facility in West Palm Beach.

On the advice of the engineer, C Solutions of Fort Lauderdale, the city council, acting as the Riviera Beach Utility District, fired Close in October 2016, more than $1.5 million short of completing the project, according to Close. The district then hired a replacement contractor, which is now near completing the project.

READ: Riviera councilman scolds critic as ‘man with rag around his head’

According to city’s outside counsel in the case, F. Malcolm Cunningham Jr., one of the main complaints about Close was its failure to provide a dewatering plan, for a facility to remove water from the lift station site. The contractor also “failed and refused” to provide documents required for payment, such as updated work schedules and drawings.

Close had been paid just less than $1.8 million. The city took just more than $1.8 million to the replacement contractor, including $200,000 “for materials and equipment that should have been furnished to the job that maybe had not been furnished to the job and for work that had to be redone because it was done improperly,” Cunningham said.

But the lawsuit alleges the utility district or engineer revised construction plans in a way that increased the value of the contract and time it would take to do the work but refused to allow Close that extra time or pay.

“Defective” contract plans furnished by the engineer “were not constructable” and indicated site conditions much different from what Close encountered during construction, including a tree the district was supposed to remove before construction began, the suit alleged. The plans also failed to show, or incorrectly showed, the location of underground utilities and the engineer repeatedly failed to authorize timely payment, it said.

There was no missing equipment, said Chris Rossi, chief estimator for Close Construction, noting that there were guards on the site for 24 hours a day.

Not only that, but the city never paid for more than $1 million worth of pipes and other materials Close provided, he said. “If they would have just paid us for the pumps and pipe valves and fittings, we could have absorbed the rest,” he said.

He blamed the firing on city mismanagement.

“They fired the utility director, there was no assistant utility director, the city manager was fired. It’s a ship without a captain,” Rossi said.

READ: Plaintiff says he’ll ask judge to overturn city manager’s firing

Indeed, the city administration has been in chaos. The council fired the city manager in September who it brought in to clean up the mess left by the previous manager it fired. A few months before, the assistant city manager who’d been passed up for the manager job resigned. The human resources director gave notice in October. The internal auditor resigned. The city has no assistant human resources director, purchasing director, IT director or building services director.

The police chief, recently the subject of a 67-3 vote of no confidence by the county Patrolmen’s Benevolent Association, is scheduled to retire near the end of the year. The public works director has been on leave for months, pending an internal investigation, while receiving full pay.

Rossi contended that city council members, who’ve been overseeing the utility, don’t understand the work and were manipulated by C Solutions into firing his firm and hiring another. That jacked up the fees that C Solutions charged to $989,000 to complete the project, up from the initial $398,000 the consulting engineer was paid to administer the original contract.

“The council, they’re like, ‘Look, what is this money for?’ They were lied to, they’ve been misinformed.”

As for the dewatering plan Close allegedly failed to provide, they submitted nine sets of plans for it,” Rossi said. They all came back red-lined with subjective changes the engineer was requiring, he said.

Mark Drummond, president of C Solutions, said there were plenty of objective criteria for firing Close. The tree removal was an excuse, and when the new contractor came in, Close’s pipes had to be taken apart and redone, he said.

“If you look at pictures of what the site was when they were working on it and see what it is now, …when someone more competent is working on it, there’s a big difference,” Drummond said. “If the project was so mismanaged, how come it’s all of a sudden moving so quickly?”

That’s because it was 70 percent complete when Close was forced to stop work, Rossi countered.

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