Jury’s Verdict for HDR is Major Setback for Tampa Bay Water

Jury’s Verdict for HDR is Major Setback for Tampa Bay Water

Source: http://enr.construction.com, April 23, 2012
By Scott Judy

After a federal jury took just four hours to rule that HDR Engineering’s design did not cause the cracks at Tampa Bay Water’s six-year-old reservoir, the utility was left with nothing for its gamble on a $30-million settlement offer but an estimated $24 million in legal bills. Nevertheless, the utility is planning to roll the dice again and seek a new trial.

The latest legal move, announced on April 16, sets the stage for a motion to appeal, says the utility. In 2008, Gerald Seeber, the utility’s newly hired general manager, advised his board of directors to proceed with the lawsuit against HDR. He remains adamant that TBW was right to blame the engineer for the cracks.

“Our position is unchanged,” Seeber said a few days after the April 10 verdict. “We feel strongly that the public shouldn’t have to pay twice for a fully functioning reservoir.”

TBW says its lawyers estimate an appeal could cost $200,000 to $400,000. The utility has not stated the rationale it will use to argue for a new trial.

While jurors may agree with the idea of not paying twice for a facility, they evidently didn’t see that HDR’s design was to blame for the significant cracking that is still occurring at the 15.5-billion-gallon C.W. “Bill” Young Regional Reservoir in Lithia. And Tampa Bay Water’s legal strategy at trial focused squarely on proving a design error.

For example, even though HDR had quality-control responsibilities in its contract, TBW attorneys expressly stated during closing arguments that the utility was making no claim against the engineer for quality-control issues—and the judge’s jury instructions repeated the statement.

That proved to be a key point. The jury’s final question to the court during its deliberations asked whether quality control includes execution of design. U.S. District Court Judge James A. Whittemore led a discussion between the parties of what “execution of design” meant. After all three parties came to an agreement, the court crafted a response that stated that, yes, overseeing construction to ensure it met design specifications fell under the heading of “quality control.” Within minutes, the verdict was in.

During both his opening and closing arguments, the utility’s lead attorney, Richard A. Harrison, emphasized to the jury, “Tampa Bay Water doesn’t want one nickel that it’s not entitled to.”

Finding no fault with HDR’s design as cause of the cracks, the jury obliged Harrison and delivered nothing—or an estimated $140 million less than TBW felt it was entitled to. (Harrison had tallied damages, starting from 2005, at $73.25 million; with interest, HDR estimates the total would accrue to more than $140 million.)

As HDR lead attorney Wayne Mason reminded the jury, it was Tampa Bay Water’s burden to prove its theory that excess pore pressure in the soil embankment caused the cracks. But as the jury’s verdict showed, the utility struggled in court to make the case.

Early on, one of the utility’s own witnesses, Dr. David Carrier, testified that he no longer supported the theory that excess pore pressure was to blame. Carrier represented the Florida Dept. of Environmental Protection, the job’s permitting agency, during the reservoir’s design, construction and operation.

Also, before Carrier testified, TBW employee Amanda Rice, the utility’s project manager during design, twice testified under redirect examination that she “may have” witnessed improper construction, thereby giving credence to HDR’s central defense.

TBW lawyers also struggled to persuade the jury that data from piezometers installed in the reservoir after the cracking occurred actually indicated increased pore pressure. But the devices didn’t show increased pressure levels, so the TBW legal team tried to convince jurors that the pore pressure was relieved when the cracks occurred.

While HDR wasn’t required to convince the jury of an alternative explanation for the cracking, it made a considerable attempt to do so. Dr. Les Bromwell, a geotechnical engineer—and former business partner of Carrier’s—used a stash of allegedly “secret photos” and an 8-ft-tall Gantt chart to lay out a compelling case that poor compaction was to blame.

How much the jury believed Bromwell is unknown, but TBW attorneys devoted much time and effort to attempting to debunk his methods and conclusions.

Before the trial started, Tampa Bay Water settled with the construction firms that built the reservoir. The utility first came to terms with construction manager, Construction Dynamics Group, for $6 million and then with general contractor Barnard Construction and its embankment subcontractor, McDonald Construction Corp., for $750,000.

Forging Ahead

Post-verdict, Seeber expressed no regrets for TBW’s rejecting the mediator-driven settlement offer of $30 million and risking incurring millions of dollars in legal bills, if it lost in court. (TBW has reported $10.6 million in legal bills to date; it expects HDR, as the prevailing party, to file for lawsuit-related expenses of between $13 million and $18 million.)

TBW’s motion seeking a new trial is the first step in filing an appeal. Timothy Connolly, executive vice president with HDR and the firm’s leader for the lawsuit, expressed frustration with TBW and suggested it’s time for the utility to move on.

In a statement to ENR, Connolly said, “Since the time when TBW excluded HDR from helping investigate the issues, to rejecting our settlement offer, they have continued to pursue an aggressive strategy of litigation rather than cooperation. The quick decision by the jury should leave no doubt that the cracking is a result of poor construction and not a design issue.”

On April 16, after Tampa Bay Water announced it planned to seek a new trial, Connolly said, “We recognize that it is not uncommon for those who lose jury trials to routinely suggest that they will appeal. We are very confident that the trial judge gave both sides a fair trial and that his rulings were correct. We see no basis for an appellate court reversing the jury’s verdict.”

It was reported that some board members questioned the viability of the pending reservoir rebuild during an April 16 closed-door meeting. But a utility spokesperson says Tampa Bay Water is proceeding with the $162.4-million contract.

Design-build team leader Kiewit Infrastructure Group, Omaha, is nearing 100% design and could receive notice to proceed with construction “sometime between Labor Day and Halloween,” says Seeber. The contract, approved last June, will rebuild the existing facility’s embankment and expand it by 3 billion gallons.

The design that Kiewit is preparing to implement will include stair-step cement for the embankment, instead of the flat-plate soil cement used by HDR.

Seeber says, this summer, the utility plans to issue between $100 million and $125 million in bonds to cover construction of the reservoir and other projects.

“It has always been TBW’s intention to issue additional bonds for a portion of the construction costs for the permanent fix and the expanded capacity of the reservoir facility,” Seeber says.

HDR is also moving on to its next project: a reservoir and stormwater treatment area in the Florida Everglades.

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