Wednesday, November 21, 2012

District seeks punitive damages in McKinstry lawsuit

New court filings accuse energy contractor of ‘hiding money’

Express Staff Writer

Heather Crocker

    The Blaine County School District has filed new documents in its lawsuit with McKinstry Essention, accusing its energy contractor of “hiding money” and “retaining profits higher than 8 percent” as agreed upon in the original contract between the parties.
    Attorneys for the School District allege that McKinstry’s “outrageous, fraudulent, malicious, oppressive and unconscionable conduct” entitles the district to unspecified punitive damages as determined by a jury.
    “McKinstry’s conduct as alleged herein was intentional, unreasonable, not fairly debatable and not the result of an honest mistake or good faith mistake,” School District attorneys state in an amended lawsuit counterclaim.
    The new documents were filed Friday along with a motion to Blaine County 5th District Judge Robert Elgee seeking to amend the district’s original counterclaim against McKinstry. A hearing on the motion has been scheduled for Dec. 17.
    Evidence supporting the new claims is found in McKinstry internal emails, which, according to Bilow’s memorandum, were obtained by the district as part of discovery, a legal process that requires opposing litigants to provide each other with the evidence that the parties plan to use at trial.
    In his memorandum, Bilow cited an email purportedly written by Jason Hynes, McKinstry’s construction manager for the School District work. The email discusses “all of the crap we have to go through to try and hide money.” It further discusses “buried margin” and how McKinstry showed an 8 percent profit margin to the School District on one invoice but took another 10 percent that “we have to hide somewhere.”
    “What is supposed to happen is the costs are supposed to be put together and that’s our budget, then we build the number up as far as we can justify it without being noticed,” Hynes allegedly wrote in the email.
    School District Communications Director Heather Crocker provided the following written statement to the Idaho Mountain Express regarding the new court filings:
    “The motion for punitive damages speaks for itself,” Crocker stated. “It makes me wonder if this is the same company that proclaimed its integrity and excellence in a recent press release a few months ago, since this filing includes McKinstry’s own internal emails about ‘hiding money’ and ‘buried margins.’”
    McKinstry, through its spokeswoman Heidi De Laubenfels, strongly denied the new accusations on Tuesday.
    “This motion is another in a series of baseless claims that the School District has made in connection with this case, which really represents nothing more than a dispute over payment,” De Laubenfels stated in a written statement provided to the Express. “These misguided tactics are unnecessarily costly to everyone involved, including the residents of Blaine County.
    “As we have all along, we at McKinstry stand by our record of integrity and professionalism. We look forward to resolving this disagreement and are confident that the legal process will confirm that our approach has been appropriate and responsible.”
    Litigation between the School District and McKinstry started in May when both parties filed lawsuits against each other. The cases were later consolidated with McKinstry listed as the plaintiff and the School District listed as the defendant.
    The dispute arose out of a contract that the parties entered into in 2010 for energy savings work and other improvements at eight district schools and facilities.
    McKinstry has alleged that it performed work worth about $25.8 million, while the district claims it authorized work worth only $18.6 million and is claiming damages against McKinstry for at least that amount.
    A jury trial in the case is scheduled to begin before Elgee on Oct. 15, 2013. The trial is expected to last about 25 days.

Terry Smith:

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