HISD LOSES TWO BIG LAWSUITS IN SWEEPING 38 PAGE VERDICT
HISD LOSES TWO BIG LAWSUITS IN SWEEPING 38 PAGE VERDICT
Jury hits HISD with over $7,000,000.00 in damages on one suit, and denies any recovery to HISD as a Plaintiff in their own $13 Million dollar lawsuit.
A unanimous Houston jury told HISD they were wrong to breach five construction contracts with a local building contractor Friday evening after a full day of deliberations. In the same 38 page verdict, the jury also told HISD that their countersuit against the contractor, Fort Bend Mechanical, along with their bonding agent, Hanover Insurance, and yet a third defendant HISD sued for defective field testing of foundations had ZERO merit and awarded no damages against any of the three defendants and awarded zero legal costs to HISD. Fort Bend Mechanical had sought almost $9 Million in damages at trial for what they alleged were multiple and repeated contract violations over the course of six construction jobs with the school district emanating from the 2007 School Bond, which had provided for almost a billion dollars in renovations to over 100 HISD campuses. The jury of 7 women and 5 men agreed with most of the complaints asserted by Fort Bend Mechanical, and awarded damages and legal fees in excess of $7 million dollars in their verdict, which came in early Friday evening in the 151st Harris County District Court before Judge Michael Engelhart.
In addition, HISD had brought a countersuit against Fort Bend Mechanical and their bonding agent, Hanover, for breaches of four of the construction contracts, and alleged almost $5 million in damages and over $2 million in legal costs against Fort Bend and another $3 Million in damages against Hanover. HISD also brought claims against Quality Control Labs for approximately $3 Million dollars, maintaining that Quality Control had failed to properly test the pier construction on one of the projects for the Worthing High School campus being constructed by Fort Bend Mechanical. The jury also unanimously agreed that neither Fort Bend Mechanical nor Hanover owed anything to HISD in damages or legal costs, and that Quality Control Labs had not engaged in faulty testing of the pier construction.
The result stems from five weeks of hotly contested testimony from all sides of the affair after four years of trial preparations. Fort Bend Mechanical loaded their legal team with four area law firms, with well-known litigator Brent Coon serving as lead counsel.
“It was very gratifying to not only help Fort Bend Mechanical recover most of what they were owed under the contracts, but also to make sure that HISD didn’t get a dime in their frivolous countersuits. Those suits were not driven by facts and contracts, they were driven by animosity and retaliation and supported only by rhetoric. Rarely have I seen a company who owed one of our clients respond by suing them back, particularly when there was no support for their legal position against Fort Bend or any other parties. Our firm rarely is called upon to defend counter-allegations as counsel, but we undertook this additional challenge and I am personally pleased to say we remain undefeated. It was also a pleasure to try the case with two of my former… and apparently well trained… lawyers in Byron Buchanan and Bob Schwartz, along with my longtime friend Brooks Harrison and former law partner Matt Willis. We complemented each other well at trial and brought our own styles and experiences with us, which I think helped fully present the case” said lead attorney Brent Coon.
Fort Bend Mechanical was the general contractor under 5 contracts with Houston Independent School District for renovation and new construction to six campuses as part of a billion dollar bond program approved by the taxpayers in 2007. The construction projects began in 2010 and entailed over 30 million dollars in contracts between HISD and FBM. Four of the six projects reached substantial completion levels by 2012. The last two projects were still far from completion at the end of 2012 when HISD determined that they would exercise their right to terminate further completion. This was primarily due to the approval of another new bond issued in late 2012 totaling over $2 Billion dollars, which added tens of millions of dollars in additional improvements to those two remaining campuses.
The result of this transition left a number of disputed closure obligations between the parties. FBM ultimately brought suit against HISD alleging dozens of separate contractual breaches on four of the five contracts covering the six campuses. These included failure to release millions of dollars in retainages, delivered materials, extra work, delay damages and pay applications totaling approximately 9 million dollars.
HISD countersued for damages, alleging FBM failed to complete punch list items, that they had been overpaid for prior work performed, that they did not owe the material values as stated, and that delays in the projects resulted in almost a million dollars in liquidated damages. HISD later added an additional $1.5 million in damages for work associated to the pier construction on the last building involved at Worthing High School, and also then brought third party claims against Quality Control Labs, alleging failure to perform proper tests on pier construction and integrity, and a clam against Hanover Insurance as the bonding agency for FBM on that work.
HISD admitted they only owed retainages on the jobs and $155,000 in the remaining material values left on site, and that they were not to be released until offsets were addressed. FBM maintained that HISD was not entitled to any of the offsets based on lack of timely contractual notice and lack of proof of any material defects in the work performed. FBM alleged HISD accepted work as substantially conforming and owed the full schedule of values on all accepted materials.
QC Labs maintained they performed their work properly pursuant to the contracts and there were no defects in the piers. Hanover as the bonding agency to the project likewise maintained there was no defects in the piers and that HISD failed to provide timely notice under the bond documents and failure to timely notify the assured of any defects or provide an opportunity to cure.
“We were particularly impressed with all 12 jurors ability to stay on top of the tens of thousands of pages of documents and exhibits involved and all of the testimony over five long weeks in trial with very few breaks”, said Mr. Coon. “The court even had the law firms provide lunches for the jury so that we could spend more time in the courtroom. We had two excellent experts in construction contract law and loss calculations to help educate an already well informed jury comprised of some folks with engineering backgrounds as well. I think this helped at the end of the day when we cross-examined over a dozen HISD retained engineers and architects involved in the various jobs. HISD was unable to pull the wool on this one. While they also had a very capable legal team, we were able to point out that in addition to the fact that every HISD called witness was on the HISD payroll in some fashion, every one of them also admitted to substantial additional “witness preparation” with HISD lawyers, clearly implicating them in coaching their trial testimony.
“I was in awe of the attention the jury paid to the numerous details in the case for five weeks”, said Byron Buchanan, another attorney on the case. “Many thanks to the 151st District Court and its staff for their professionalism. They are an asset to The citizens of Harris County and the State of Texas. Our client is grateful to have gotten his day in court and we hope this verdict sends a message to HISD that it needs to be a better steward of the taxpayers money”.
“After four long years FBM finally got their day in court before a jury of their peers and in front of a fair judge who applied the law. Sometimes the bullies don’t get their way and are held accountable. I’m honored to be part of a world-class trial team standing up to the HISD bully – that’s justice in and of itself.”
How did HISD spend the money?
One critical aspect of the case was condemnation by plaintiff and counsel over wasteful spending practices by HISD leading up to the lawsuit and further wasteful spending by HISD with new bond monies from 2012 which overlapped these projects, as well as wasteful prosecution of a countersuit against Fort Bend and the other defendants.
“What we know is that HISD received a billion dollars in bond money in 2007 for over 100 new construction projects”, said Brent Coon, lead attorney. “It is clear that many of the HISD personnel and hired consultants were not thorough in the planning stage, which resulted in many millions of dollars being wasted for revisions and modifications after plans were submitted for bid. This resulted in numerous delay charges as well as further architectural and engineering fees. These revisionist practices then led to many other fundamental errors like turning in the wrong plans to the city for permits. An example is what occurred in our trial on the Worthing High School. HISD permitted the wrong plans and was exposing the district to all sorts of penalties and other costs. Rather than confront the issue head on, HISD hired architects who backdated documents and their hired engineers then provided false reports to the City of Houston. Thereafter they fired the contractor, Fort Bend Mechanical, to shut down the job and buy them time to bring in a new contractor and new plans to start all over. That cost the taxpayers an additional $8 million in construction costs alone in just one job, and several million dollars more in collateral costs. The architectural fees alone ended up being well over a million dollars. Why would anyone use bond money to remodel campuses and then tear it up in the middle of the job just because they have some more money from another bond? They should finish the scope of work from one bond before requesting more bond money so that it is not wasted redoing pending construction jobs” said Brent Coon, lead counsel for the plaintiff legal team.
“Monies misappropriated on changing these jobs and sloppy practices aren’t the only places they waste money. To defend their actions in nonpayment to FBM, they have spent two million in legal fees alone and almost 500 thousand dollars on just one of their experts for their lawsuit against FBM and others, which the jury ultimately said didn’t have any merit in the first place. They paid one of their witnesses 25 grand just for coming to the courthouse to testify for two hours. It is painfully clear that HISD needs help at the apex levels in properly managing major construction projects and one suggestion would be that the monies be spread out over longer time frames so that plans are thought out better, drawn and engineered better, properly permitted, and then constructed in a timely manner with few alterations and delays. Hundreds of millions of dollars likely gets wasted with this level of mismanagement of the money when such large blocks of bond monies come in at one time and everyone immediately wants a piece. People like our client get caught in the crossfire when this much work tries to get done this quickly, particularly when HISD decides to completely alter the scope of work in the middle of projects”.
“We appreciate all the time and attention our jury gave to hearing 5 weeks of testimony on this case and reaching a decision based on a review of thousands of documents, many witnesses and over a dozen experts involved in the case. Our civil justice system continues to work because of the sacrifices of our citizens to take this much time out of their own lives at no charge to anyone, and often to their own personal loss. Hopefully HISD can move forward with our community in a positive manner with lessons learned from a very public hearing on how this happened. Maybe they can know do a better job moving forward” said Brent Coon in recapping the results.
“Today a jury told HISD they were not acting responsibly as a custodian of the public trust”, said attorney Bob Schwartz. “They told HISD they were wrong to withhold payments due for construction work performed by Fort Bend Mechanical and they were wrong to refuse to honor the very contracts that they had drafted. They also told HISD they were wrong to maliciously file lawsuits back at Fort Bend Mechanical, Quality Control Labs and Hanover Insurance, claiming almost $5 million in damages under the contracts and over $2 million dollars in legal costs to Fort Bend and several million dollars more in claims against Quality Control Labs and Hanover.
The unanimous jury verdict saying HISD was entitled to ZERO dollars on every single claim they brought against all three defendants speaks volumes. Our jury today told HISD they did not condone wasteful spending of taxpayers’ money to harass and bully a contractor solely to hide its own financial mismanagement and falsification of government records.“
The Client: FORT BEND MECHANICAL
Pete Medford, a co-owner of Fort Bend Mechanical during the time frame involved, was a key ingredient to the outcome. He was personally aware of almost all of the details of the work performed under all five contracts and took the witness stand for almost a week of intensive examination and cross examination. A tearful Pete was there when the verdict came in and thanked each one of the jurors for fulfilling their community obligations to serve in a very long and trying case.
“I can’t thank everyone enough. This has been a very emotional and draining experience for me. Having to defend my company from all the misrepresentations of HISD was very challenging, and going back over all the details of thousands of invoices, pay apps, change orders and plan specifications on all these jobs has been a full time job for me for months before the trial actually started. I am so grateful that we were finally able to get to the courtroom after four years of this to hopefully begin the emotional and financial healing process. I had a lot of good friends as subcontractors and vendors on these jobs who have been waiting for me to get paid so they can get paid as well. What HISD did in not paying us what they owed hurt a lot more local companies than just Fort Bend Mechanical.
I am also glad to see that the jury told HISD that they have to honor ALL the terms of their contracts, and they can’t just pick and choose. It was their contracts, so they shouldn’t be able to complain about them after the fact. Lastly, it was total BS for them to come back years later and make many millions of dollars of additional claims against me and other companies for allegations that the piers on the Worthing project were defective. All they were doing is trying to cover up for the fact that they used the wrong plans on the job. They also knew that a new contractor would never come in and use someone else’s piers on a big job anyway, and they were going to have to replace them regardless. The fact that they cut all 268 of the 20 foot deep piers off 5 feet below grade, haul off and destroy every one of the top sections, and then cover it all back up before notifying my company or any of the other defendants in their countersuit should tell you volumes about their motivation.”
Medford says, “It is said it is hard to find heroes in this day and time, and it is said you can look up at your heroes without apology. I, my family and my company are looking up at 12 honest, hardworking, unselfish Harris county residents, jurors who gave up their jobs and families to listen to our case and deliver unbiased justice as they saw it, along with Judge Mike Engelhart and his professional staff who remained unbiased and extremely patient throughout this entire process. The taxpayers of HISD deserve better, and deserve to know how the Houston Independent School district is wasting millions of their tax dollars on cases like this and on the hundreds of architects and engineers performing millions of dollars of designs and engineering that ultimately had to be corrected by Fort Bend Mechanical and other contractors and HISD not holding those architects, engineers and CMPA firms accountable for their mistakes. “
The “defective pier” allegation by HISD was another unusual twist in the case. The $14 million dollar new building going in at Worthing High School entailed an 86,000 square foot pad site with 268 support piers. Fort Bend Mechanical subcontracted the pier drilling work to Groundhog Foundation Drilling, and the pier construction was then inspected by Quality Control Labs, under separate contract directly with HISD. Daniel Bankhead with HISD testified that the new 2012 $2 Billion dollar bond entailed an additional $30 million in construction funds for Worthing, so they decided to shut down the construction project in mid- stream with FBM in order to solicit new bids on that work and expanded scope of work with the new monies. FBM maintained this invited all sorts of problems. In addition to ultimately paying a new contractor over $22 million for essentially the same building under contract with FBM for $14 million, they were not able to get much of the benefit of the several million dollars in work performed by FBM either. The new contractor refused to rely on piers they didn’t build and it ultimately cost more to tear everything out and start over then it would have to start out from scratch. FBM also claimed that HISD would be able to cover their tracks with an all new set of plans with a new contractor for permitting and never get caught by the City of Houston for starting the job initially with unapproved plans.
“HISD kept trying to tell us, the Court and the jury that it was OK to use unapproved plans on the job but we called in the head of permitting and building inspection with the City early on in our case. He made it abundantly clear that what they were doing was wrong and in 17 years of overseeing permitting work he had never seen errors of this magnitude. It wasn’t surprising to him in light of what transpired that they NEVER went back and told the City of Houston about their original mistakes when they submitted new plans for the new contractor in 2013”. Again, sloppy practices cost HISD, and ultimately the taxpayers, a lot of additional money” said Brent Coon.
About Brent Coon & Associates:
Brent Coon & Associates was founded in 2001. Today, with multiple satellite offices around the country and hundreds of associated firms in various practice areas, it is one of the most recognized trial law firms in the nation and the epitome of the 21st century law practice. Brent Coon & Associates employs a full complement of aggressive litigators with solid experience in individual and complex multi-party, occupational/environmental, health and personal injury cases.
BCA is a public policy firm and has worked with numerous state and federal investigative agencies, including the Department of Justice, multiple state Attorneys General, the United States Chemical and Hazards Investigation Board. BCA serves as institutional or advisory counsel to numerous agencies and organizations, including the United Steelworkers, pilot unions, railroad and other transportation unions. Their work in this arena has led to widespread improvements in the safety and working conditions of industries throughout America and abroad.
The firm and founder have been repeatedly recognized by most leading journals and legal associations including Texas Lawyer Litigation Department of the Year (2013); Forbes “Lawyer of the Month” and Forbes “Top 75 Litigation Firms”; MTMP “Clarence Darrow Award”; Texas Monthly Magazine “Texas Super Lawyers” (2007-2015); “Best Lawyers in America”; Lawdragon “”500 Leading Plaintiff Lawyers in America”; American Association of Justice “
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