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Sidewalk suit pending

The town of Farragut may be named in a lawsuit filed by Cozy Excavation and Contracting, LLC against Rich Construction Company Inc.

The suit is due to Rich’s alleged non-payment of contracted funds to Cozy on the 2006 Smith Road sidewalk project.

Town attorney, Tom Hale, said, “Apparently Rich [subcontracted] a fair amount of that work to Cozy Construction, and they have not paid Cozy and so Cozy has filed a lawsuit against Rich, not only on this contract, but on another contract [as well].”

Hale added the Town is in a disagreement with Rich over a couple of issues, which has held up payment of about $64,000. The Town does not dispute it still owes Rich for the sidewalk project.

Loy Waldrop, attorney for Rich Construction, said if the disagreement between Rich and the Town is not resolved soon, he anticipates the Town will be added to the lawsuit between Rich and Cozy.

There are several factors involved in the disagreement between the Town and Rich Construction.

“[Rich] has requested additional money that we do not believe they are entitled to,” Hale said.

Rich Construction did some additional work to tie in the driveways of some of the residents on Smith Road; work that Hale said was priced at $28,000 in the original bid.

“They want [about] $40,000, which is $12,000 more than what they bid,” Hale added.

The Town also has assessed liquidated damages on Rich Construction since the work was allegedly not completed under the terms of the contract.

“Rich submitted its bid [for the project] in June 2006 and it appears the contract [was] signed on July 17, and the work was to be completed by Nov. 17, 2006. They were not finished anywhere near the time [frame]. They came in and requested an extension. Town staff did not believe they should have an extension. They felt they had ample time to do the work and just did not make the proper arrangements to get it done.

“The Board, in an attempt to be cooperative, gave them an extension of several months. That time frame came and went and they still were not finished with the work under the contract,” Hale said.

“In the contract there is a provision for $500 per day in liquidated damages if they do not complete the project within the timeframe provided for in the contract,” he added.

The Town has assessed $17,500 in liquidated damages against Rich, Hale said, for completing the work 35 days beyond their extended completion date.

“We have reviewed their reasoning for why they think they should not be assessed the penalties and we do not believe they are legitimate, appropriate reasons for delay,” Hale said.

Waldrop said, “It is not unusual in the construction business to have disagreements at times over things such as delays to the project, completion dates and that sort of thing. It is Rich’s current position that the Town is not owed any liquidated damages.”

“[This] is the public’s money and we have these contracts for a reason. If we are just going to ignore our contracts and not hold people to them, that sets a very bad precedent for other people that contract with the Town,” Hale said.

“There is a ‘not insignificant’ amount of money [about $64,000] the Town agrees it still owes Rich. We have offered and have been trying to pay that amount of money so Cozy can get paid, but we have not been able to work that out. We are not withholding the money, but [Rich] has not been willing to authorize the payment of the money to Cozy so they can satisfy their obligation to Cozy.

“It’s like a domino effect. The Cozy people do not want us to pay the money to Rich, because then they may not get the money they are owed,” he added.

Angel Johnson, secretary, treasurer and part owner of Rich Construction said, “We are pretty much at the mercy of the attorneys right now, but I can tell you that I an disappointed with the town of Farragut and with the Board.”


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