Friday, November 30, 2012

District disputes McKinstry claims

Court filings accuse contractor of ‘negligent conduct’

Express Staff Writer

The Blaine County School District contends in new court filings that if there were deficiencies in the district’s contract with McKinstry Essention, then the problems were the result of McKinstry’s own “negligent conduct” in not fulfilling the terms of the agreement.

The new documents, filed in Blaine County 5th District Court on Wednesday, respond to a motion filed by McKinstry on Nov. 19 wherein the company is seeking a court ruling to nullify the contract as “unenforceable.”

McKinstry argued in its documents that the contract failed to delineate detailed information about the scope of work and to establish a final price.

The main piece missing from the original contract between the parties, signed in early 2010, is what is referred to as “Amendment 1,” a document that was to be prepared by McKinstry that would further define scope of work and could adjust the contract price if needed. According to the new district court filings, McKinstry prepared a draft Amendment 1 that was circulated internally within the company but was never submitted to the School District for approval and for inclusion in the contract.

“McKinstry is now attempting to benefit from its own material breach of contract by alleging the scope of work was never defined,” Boise attorneys Robert Bilow and Richard Greener, representing the School District, wrote in a new court document. “If this is the case, the scope of work was never defined due to McKinstry’s own negligent conduct.”

Bilow and Greener further wrote that if McKinstry had questions regarding the scope of work, the company at no time while the work was being performed submitted anything in writing to the district for clarification.

Litigation between the parties started in May. The dispute arose out of a contract that the parties entered into for energy savings and other improvements at eight district schools and facilities.

McKinstry has alleged that it performed work at the district’ direction worth $25.8 million and that the district still owes the company about $7 million. 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, expected to last 25 days, is scheduled to begin on Oct. 15, 2013.

In the meantime, the district and McKinstry continue to gather evidence and to haggle over what can and cannot be considered at trial.

The new district documents filed this week not only address McKinstry’s motion to have the contract nullified but also seek a continuance of a hearing on the motion, now scheduled to take place Dec. 17.

Bilow and Greener argue that a ruling now on McKinstry’s motion would be “premature” because the district needs more time to gather information to counter it.

Oral arguments on scheduling the hearing are set to take place Dec. 5. 


The missing amendment

A copy of the McKinstry draft of Amendment 1 is now publicly available in the case court file. Bilow and Greener explained in court documents that the draft was provided to the district during discovery, a legal procedure that requires litigants to share information that may be pertinent to a case.

The draft has a forwarding email from McKinstry official Thomas G. Phillips dated Oct. 31, 2010. In the email, Phillips is requesting review from other McKinstry employees.

Language in the draft shows that at that time, McKinstry intended to prepare other contract amendments to further define the scope of work and change prices as work progressed.

The draft also shows that McKinstry knew as early as 2010 that the cost for the work would be higher than originally estimated. The draft proposed raising the “guaranteed maximum contract price” from $15.16 million to $16.03 million.

The district authorized about $3.5 million in change orders for work not directly related to energy savings after the contract was signed. However, the contract was also never amended to reflect those authorizations.

Bilow and Greener wrote in court documents that the district has never received an answer from McKinstry as to why Amendment 1 was never submitted to the district for inclusion in the contract.

The same question was put to McKinstry spokeswoman Heidi De Laubenfels by the Idaho Mountain Express on Wednesday. She did not respond by press deadline Thursday.

Terry Smith:

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