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RON T. BLEWETT
ISB NO. 2963
CLARK and FEENEY
The Train Station, Suite 201
13th and Main Streets
P. O. Drawer 285
Lewiston, Idaho 83501
Telephone: (208)743-9516
Facsimile: (208)746-9160
Attorneys for Plaintiff
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
EMPLOYERS INSURANCE OF WAUSAU)
A MUTUAL COMPANY, a Wisconsin )
mutual company, )
)
Plaintiff, )
)
vs.
ST. CLAIR CONTRACTORS, INC., an
Idaho corporation; ARLISS A. ST. CLAIR;
RANDALL T. ST. CLAIR and
CINDY M. ST. CLAIR, husband and wife;
DENNIS RAY ST. CLAIR and
KAREN ELAINE ST. CLAIR, husband
and wife; THE CITY OF McCALL, an
Idaho municipal corporation;
INTERWEST SUPPLY, INC., an Idaho
corporation; and DEVELOPERS SURETY
& INDEMNITY CO., an Iowa corporation,
Defendants.
INTERWEST SUPPLY, INC., an Idaho
corporation,
WAUSAU'S STATEMENT OF UNDISPUTED
FACTS IN SUPPORT OF ITS MOTION FOR
PARTIAL SUMMARY JUDGMENT AGAINST
THE CITY OF McCALL
1
U.S. District Court
Case No. CIV01-0629-S-BLW
WAUSAU'S STATEMENT OF
UNDISPUTED FACTS IN SUPPORT
OF ITS CONSOLIDATED MOTIONS
FOR PARTIAL SUMMARY
JUDGMENT
COS' Y
LAW OFFICES OF
CLARK AND FEENEY
LEWISTON, IDAHO 83501
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Counterclaimant and Crossclaimant, )
)
vs. )
)
EMPLOYERS INSURANCE OF )
WAUSAU A MUTUAL COMPANY, a )
Wisconsin Mutual Company, )
)
Counterdefendant, )
)
and )
)
THE CITY OF McCALL, an Idaho )
municipal corporation, )
)
Crossdefendant. )
ST. CLAIR CONTRACTORS, INC., an )
Idaho corporation, )
)
Crossclaimant, )
)
vs. )
)
THE CITY OF McCALL, an Idaho )
municipal corporation, )
)
Crossdefendant. )
)
ST. CLAIR CONTRACTORS, INC. , an )
Idaho corporation, )
)
Third -Party Plaintiff, )
)
vs. )
)
OLDCASTLE PRECAST, INC., d/b/a )
AMCOR PRECAST, )
)
Third -Party Defendant. )
)
WAUSAU'S STATEMENT OF UNDISPUTED
FACTS IN SUPPORT OF ITS MOTION FOR
PARTIAL SUMMARY JUDGMENT AGAINST
THE CITY OF McCALL
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LAW OFFICES OF
CLARK AND FEENEY
LEWISTON, IDAHO 83501
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COMES NOW the plaintiff, Employers Insurance of Wausau, and hereby submits Wausau's
Statement of Undisputed Facts in Support of Its Consolidated Motions for Partial Summary
Judgment as follows:
1) The City of McCall was a party to an Amended Consent Order with the Idaho
Department of Health & Welfare requiring Completion of the J-Ditch Phase II Proj ect by November
2, 2000. (Deposition Exhibit #2).
2) The City entered into a contract with J-U-B Engineering, Inc. to design and monitor
construction as set forth in its contract. (Deposition Exhibit #1).
3) The City entered into a contract with St. Clair Contractors, Inc. for construction of
the J-Ditch Phase II Project. (Deposition Exhibit #3). The City's contract representative was the City
Manager, Robert Strope, and its project representative was the corporation J-U-B Engineering, Inc.
Prior to initiating work, St. Clair advised the City of the need to be paid timely to continue working.
Robert Strope advised the City Council that the goal must be to pay St. Clair monthly.
4) Employers Insurance of Wausau posted performance and payment bonds (also
contained within Deposition Exhibit #3) in reliance on an Indemnity Agreement executed by St.
Clair Contractors, Inc. and by the individual St. Clair defendants.
5) The project schedule was "tight" requiring a large amount of construction work to be
done in a short time between approximately May 17, 2000, and November 2, 2000. J-U-B advised
the City that earthwork embankment would need to be done by the first week of September 2000 to
complete the project that year. The City of McCall is a ski resort town at 5000' elevation. J-U-B and
the City advised Wausau that normal winter shutdown for construction projects is in November.
WAUSAU'S STATEMENT OF UNDISPUTED
FACTS IN SUPPORT OF ITS MOTION FOR
PARTIAL SUMMARY JUDGMENT AGAINST
THE CITY OF McCALL
3
LAW OFFICES OF
CLARK AND FEENEY
LEWISTON. IDAHO 83501
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I
6) St. Clair encountered conditions which delayed earthwork embankment. and for
which City representatives acknowledged St. Clair would be entitled to additional time under its
contract. These conditions included at least (a) encountering underground pits containing debris and
junk, (b) increased embankment quantities by at least 130% of original quantities, and (c)
precipitation in September of 2000 which was over 250% of the 10-year average. Work originally
scheduled for good weather earlier in the year was slowed because it had to be performed in bad
weather later in the year.
7) In order to determine the effect of delays on the completion date, a critical path
method (CPM) schedule is customarily prepared. It is necessary to evaluate the effect of a delay on
the critical path method schedule, in order to measure how the contract completion date was
impacted. The City relied on J-U-B to prepare a schedule analysis in evaluation of the effect of the
delays. J-U-B, however, did not perform any such schedule analysis.
8) The City Manager would have granted St. Clair more time, but for the consent order
requirements, and felt the situation was different because of potential fines which may be imposed
under the consent order. St. Clair was told by J-U-B that contract time would not be extended. St.
Clair was not required to comply with the consent order. The City Manager did not feel the City
could give St. Clair more time by reason of the terms of the consent order.
9) On December 4, 2000, J-U-B revised its pay recommendation and the City withheld
over $920,000 from payments previously approved to be made to St. Clair. The City advised its
funding agency (BOR) that the $920,000 would be sent back to them. Before December 4, 2000, St.
Clair had not been paid for any work completed since September 1, 2000. On December 4, 2000, St.
WAUSAU'S STATEMENT OF UNDISPUTED
FACTS IN SUPPORT OF ITS MOTION FOR
PARTIAL SUMMARY JUDGMENT AGAINST
THE CITY OF McCALL
4
LAW OFFICES OF
CLARK AND FEENEY
LEWISTON, IDAHO 83501
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Clair advised J-U-B that it would leave the project for nonpayment.
10) The pay withholding of $920,000 was in addition to 5% retainage already withheld
and in addition to a 100% performance bond provided by St. Clair. The $920,000 withholding
included multiple times the value of the 20+ acres of liner which had been installed and covered the
interior of the J-Ditch Phase II sewage effluent reservoir. The City did not pay for any portion of the
liner based on a percentage of completion. The City had not paid anything for excavation of the
debris pits.
11) The City Manager acknowledged at least an additional $370,395 was due and payable
to St. Clair and this amount was paid January 31, 2001. On that date, St. Clair tendered its offer to
complete the contract by June 1, 2001 (the new regulatory deadline). As little as two days later, the
City notified St. Clair its contract would be terminated. When asked what changed between the date
of payment and termination, the City Manager could only reply that the City decided to terminate.
12) As a result of the City's withholding, St. Clair could not pay its bills. Wausau
gradually received and ultimately paid payment bond claims from St. Clair's subcontracts and
suppliers totaling $1,182,369.
13) When the City terminated St. Clair's right to complete its contract, a performance
bond demand was tendered to Wausau. In reliance on a City resolution to pay the balance of the
contract price to Wausau, Wausau elected to complete under express reservation of rights. The city
acknowledged that everything Wausau has done was with an express reservation of rights.
14) Wausau entered into a Completion Contract with Interwest Supply, Inc. The
Completion Contract was entered after Interwest received full payment of its payment bond claims.
WAUSAU'S STATEMENT OF UNDISPUTED
FACTS IN SUPPORT OF ITS MOTION FOR
PARTIAL SUMMARY JUDGMENT AGAINST
THE CITY OF McCALL
5
LAW OFFICES OF
CLARK AND FEENEY
LEWISTON, IDAHO 83501
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Interwest provided performance and payment bonds from defendant Developers Surety and
Indemnity Company, also well after Wausau had paid Interwest's payment bond claims. Interwest
in the ensuing months worked on performance of the Completion Contract and requested and was
paid over one million dollars by Wausau for its work. No notice of any alleged interference or duress
was provided from Interwest to Wausau until Interwest's Answer and Counterclaim in this
proceeding was served.
15) During the course of St. Clair's work on the primary wet well in the fall of 2000, J-
U-B's resident project representatives took various photos of construction components later encased
in concrete and buried as much as 60 feet deep in the dike embankment. The dike embankment was
later covered with geomembrane liner and the reservoir began filling with sewage effluent. St. Clair
was never advised that J-U-B deemed the construction components defective as required by contract
documents.
16) In July and September of 2001, J-U-B sent letters to Wausau claiming certain work
performed in September of 2000 (now encased in concrete, buried, and covered with liner) was
defective. J-U-B decided the work was defective based on a review of photographs which J-U-B had
taken the previous year. The photographic review was undertaken by Mr. Wagner and Mr. Uranga
with a magnifying glass.
17) This was the first notice to anyone that J-U-B deemed the work defective. While any
such alleged defects would have been comparatively simple to evaluate and repair (if necessary) at
the time the photos were being taken, it was impossible to inspect the thrust restraints for they were
encased in concrete and buried deep in the ground, and it was not possible to repair the claimed
WAUSAU'S STATEMENT OF UNDISPUTED
FACTS IN SUPPORT OF ITS MOTION FOR
PARTIAL SUMMARY JUDGMENT AGAINST
THE CITY OF McCALL
6
LAW OFFICES OF
CLARK AND FEENEY
LEWISTON. IDAHO 83501
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defects other than from the interior of the wet well, unless one wanted to dig up the reservoir dike
and dismantle wet well components, and dump sewage effluent in the Payette River. A new system
had to be designed and built on the interior of the wet well to address the claimed defects and the
work was delayed.
18) At the time the original construction contract was drawn, the City anticipated
additional engineering fees if the work was not timely completed. The contract contained provisions
for liquidated damages for delayed completion. Wausau expended over one million dollars in
completion costs incurred under its reservation of rights, and more funds are claimed against it by
Interwest as completion contractor. The City only paid Wausau $275,000.36 for its work and made
various claims for withholding the remaining balance of the contract price from Wausau. The
withholding included both the actual damages (including ongoing engineering fees) incurred by the
City, as well as all of the liquidated damages claimed by the City.
DATED this 166 day of April, 2003.
CLARK and FEENEY
By
Ron T. Blewett, a member of the firm.
Attorneys for Plaintiff
WAUSAU'S STATEMENT OF UNDISPUTED
FACTS IN SUPPORT OF ITS MOTION FOR
PARTIAL SUMMARY JUDGMENT AGAINST
THE CITY OF McCALL
7
LAW OFFICES OF
CLARK AND FEENEY
LEWISTON, IDAHO 83501
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I hereby certify on the ( u
day of April, 2003, a true copy
of the forego g instrument
was: V Mailed
Faxed
Hand delivered
Overnight mail to:
Ms. Susan E. Buxton
Moore, Smith, Buxton & Turcke, Chtd.
225 N. 9th Street, Suite 420
Boise, ID 83702
Mr. William A. McCurdy
Brassey, Wetherell, Crawford & McCurdy
1001 W. Idaho, 3'd Floor
P. O. Box 1009
Boise, ID 83701-1009
Mr. Geoffrey J. McConnell
Mr. Paul Boice
Meuleman & Miller, L.L.P.
960 Broadway Avenue, Suite 400
Boise, ID 83706
Mr. Kenneth D. Nyman, Esq.
Anderson, Julian & Hull
250 S. 5'h, Suite 700
P. O. Box 7426
Boise, ID 83707
Mr. David Kerrick
David Kerrick & Associates
1001 Blaine Street
P. O. Box 44
Caldwell, ID 83606
CLARK and FEENEY
By
Attorneys for Plaintiff
WAUSAU'S STATEMENT OF UNDISPUTED
FACTS IN SUPPORT OF ITS MOTION FOR
PARTIAL SUMMARY JUDGMENT AGAINST
THE CITY OF McCALL
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LAW OFFICES OF
CLARK AND FEENEY
LEWISTON, IDAHO 89501