Oak Harbor Street dispute lands in Superior Court

It appears the problems that plagued the N. Oak Harbor Street Improvement project have come back to bite the city after all.

GG Excavation, the Anacortes contractor hired to complete the $1.54 million road project, is seeking $230,200 in damages from the city in a cross claim of a lawsuit filed against the contractor this past February.

Oak Harbor officials believe there is no validity to the claim and attorneys from the city’s hired law firm, Seattle-based Hedeen & Caditz, have filed a motion for summary judgment in Island County Superior Court.

“The city paid GG excavation in full and GG agreed with that,” said Arne Hedeen, a civil litigation attorney with the firm who specializes in construction and government contract law.

Summary judgment is a mechanism to avoid lengthy litigation and is sought when only questions of law are believed to be in dispute.

The N. Oak Harbor Street project saw the improvement of a little more than a half-mile of roadway, from E. Whidbey Avenue to NW Crosby Road. The project began in March and had a completion deadline of July 28. However, a number of problems occurred that delayed its finish until September.

Island-medians meant to aid pedestrian crossing and about 700 feet of sidewalk that were installed had to be torn out and redone. The medians were blamed for impeding traffic and the sidewalks were not built to specifications. Other complications included the removal of a power pole and the placement of mailboxes.

Based on court documents, the lawsuit began in February when a sub-contractor for GG filed suit against the firm, First National Insurance Company of America and the city. The company, Northwest Barrier, claimed it had not been paid for services and filed for a lien against the city’s retainage bond and against the contractor’s payment bond.

According to City Administrator Paul Schmidt, state law requires that cities retain 5 percent of a contractor’s fee until state regulators give the OK for its release. It’s a safeguard meant to ensure that sub-contractors are paid for their services.

“Apparently GG wasn’t paying all their subs,” Schmidt said.

Court documents indicate that as of June 10, five other sub-contractors had also filed claims against the retainage bond. Including Northwest Barrier’s lien, they total $149,757, which far exceeds the $78,785 held by the city.

In response, GG and First National’s attorney filed a counter-claim against Oak Harbor, alleging that it may be liable for breach of contract and that claims against GG could be attributable to the actions of the city.

“The design plans provided by the city of Oak Harbor to GG contained many errors and were not buildable as designed,” the cross claim said, which was prepared by the company’s attorney Alan Souders of Anacortes. “When GG inquired concerning the errors or specifics of the project to be built, the city provided either no response or a delayed response.”

It went on to say that the combination of the two caused a delay of at least 45 days, resulting in labor and equipment costs along with liquidated damages.

According to Hedeen, the city is filing for summary judgement largely because GG executed a final contract voucher certificate and signed a change order that absolved the city for all potential claims. It also didn’t comply with claim noticing documentation required in its contract, he said.

“The city feels strongly that it paid GG in full,” Hedeen said.

The issue is scheduled to go before Island County Superior Court Judge Alan Hancock on Dec. 15 at 9 a.m.


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