Recommendation for Acceptance of Settlement

The School Board attorney recommends to the School Board the acceptance of a proposed settlement to resolve litigation relating to the construction of Symmes Elementary School. In 2006, the Board retained the firm of Hill, Ward & Henderson to recover monies spent by the Board in demolishing and reconstructing two of the new buildings erected on the Symmes school site. The buildings were demolished and rebuilt on the advice of a structural engineer retained by the Board after significant cracks appeared in the slab and walls of the buildings and those slabs “heaved” (moved upward). The decision to demolish and rebuild rather than take less drastic remedial actions was driven primarily by concern for the safety of the children, faculty, and staff who would be housed in the building. Demolition and rebuilding provided the only guarantee of the structure’s safety. The total cost incurred by the Board in demolition and reconstruction was approximately $5,000,000.

The Board brought suit against Skanska USA, Inc. (formerly known as Beers Construction Company), the general contractor on the Symmes project, Portela and Griffin Architects, P.A., the architect, and Test Lab, Inc., the geotechnical engineering firm retained by Portela. Portela and Test Lab were insured by policies, meaning that they would be reduced by the amounts incurred by the insurance companies in defending against the Board’s claims.

In order to preserve as much insurance coverage as possible, the case was mediated prior to the taking of substantial discovery. That mediation resulted in an agreement by Portela's insurer to pay $775,000.00. At mediation, the insurer for Test Lab revealed for the first time that Test Lab had allegedly not given its insurer sufficient notice of the Board’s claim. That insurer therefore took the position that it was not liable for any damages and Test Lab would be entirely responsible for them. A search of all appropriate records revealed that neither Portela nor Test Lab possessed sufficient assets to satisfy any amounts they might owe the Board beyond those amounts covered by insurance.

In further negotiations following the mediation, Test Lab’s insurers agreed to pay $500,000.00. Negotiations then continued with Skanska, resulting in a final offer from Skanska in the amount of $150,000.00. The total amount of the proposed settlement is $1,425,000.00. The Board’s outside counsel, Hill, Ward & Henderson, recommends acceptance of the settlement based on the nature of the insurance coverage, the parties’ lack of other assets to cover the Board’s losses, and the low probability of a greater recovery at trail trial.