Weatherford Democrat

January 2, 2013

Judge rules against Willow Park


Weatherford Democrat

— By CHRISTIN COYNE

A North Richland Hills company suing the City of Willow Park for breach of contract regarding nearly $200,000 in unpaid engineering and consulting fees was handed a victory last week when 43rd District Judge Trey Loftin handed down a summary judgement in the business’ favor.

The ruling awarded the company nearly $190,000 plus annual interest, attorney fees and court costs.

A Willow Park city official said there will be an appeal. Also, a pending counterclaim filed by the city earlier this month against the E.S. & C.M. Inc. remains before the court.

The company claims the city owes them about $190,000 for the first phase of engineering work completed under a contract signed by city officials in January 2008 regarding a then-planned regional sewage treatment plant, a multi-million dollar project that planned to use Texas Water Development Board monies.

When the TWDB in 2008 declined to fund the project months later over pending lawsuits involving the city, the city declined to pay E.S. & C.M. for the majority of the approximately $280,000 amount of work already completed, according to court filings.

The judgment noted that the court “finds that there is no genuine issue about any material fact,” and that E.S. & C.M. was entitled to $190,000, plus 6 percent pre- and post-judgement interest, as well as attorneys fees and court costs.

The city lost their chance at project funding due to their own actions and, under the terms of contract signed by the city, owe the company for all the work completed during the first phase of the project, according to E.S. & C.M.

The company claims former mayor Marvin Glasgow submitted a falsified sworn statement during the application process saying the city was not involved in any lawsuits. However, Willow Park at the time was in the middle of litigation that included the highly publicized lawsuit involving the Deer Creek water system.

“The city sabotaged its own efforts in the funding application by the submission of a false affidavit by the mayor of the city to the great alarm of the government officials and the surprise of the bonding and finance professionals who were a part of the application team,” attorneys for E.S. & C.M. wrote in December, noting that Willow Park had not addressed that issue in court filings.

TWDB indicated that once the affidavit issue was addressed, it was willing to re-engage the application process, according to E.S.& C.M., which stood to gain $1.12 million over the course of the full project.

The company was contacted by then city administrator Claude Arnold in July 2007 to begin designing and preparing construction documents for the project, as well as help them seek funding from the Texas Water Development Board. E.S. & C.M. began submitting invoices to the city before the first of the year but the city did not formally sign a contract with them until January 2008, according to court records.

E.S. & C.M. agreed to defer billing the city for the full amount of work it was completing until the city received the funding needed to complete the project, though the city did budget for the entire “first phase” portion of the project, court documents state.

In 2010, the city of Willow Park withdrew its application to TCEQ for the project, according to Mayor Richard Neverdousky, who said the project as envisioned five years ago will not occur.

After repeated failed attempts to collect the money, the company, which has a 25-year working relationship with the city, filed suit against the city in April 2011.

Counterclaim

The city is seeking unspecified damages in a counterclaim filed with the district clerk’s office on Dec. 19. Willow Park alleges E.S. & C.M. failed to fulfill the terms of the contract by not submitting detailed progress reports with their invoices as required by the agreement.

E.S. & C.M. “recklessly asserted without any knowledge of the truth” that the city would receive funding from the TWDB, according to court filings.

“The defendant was fraudulently induced to enter into the purported contract with the plaintiff and the contract should not be enforced,” the counterclaim states, adding both parties were mistaken in believing the state would provide funding.

However, E.S.&C.M. disputes that, stating that the company fulfilled the contract, producing preliminary design and feasibility reports provided to the city and the TWDB in 2008. The work and invoices were not the subject of complaint until 17 months into litigation, according to E.S. & C.M.

The company’s attorneys characterized the counterclaim as an “unnecessary delay” in recovering damages for the city’s breach of contract.

E.S. & C.M. also stated that the record of evidence shows no representation on the part of E.S. & C.M. that funding was guaranteed, though one company official did tell the city that they had never had a funding application denied.

Response

Jeff Smith, attorney representing E.S. & C.M. along with John DeVoss, said Monday his client was pleased the judgment showed the court’s view of the case was consistent with his client’s.

“Obviously, there are some additional steps that need to be taken,” Smith said, referring to the counterclaim and an open motion to severe that from the original claim.

An attempt Monday to contact Keith Hamilton of E.S. & C.M. was not successful.

Neverdousky said the judge’s ruling came as a big surprise to the city.

“Obviously, we going to pursue an appeal and we’ll go on from there,” Neverdousky said. “From our standpoint, we don’t think they did what the contract said they would do.”

The city has spent roughly $100,000 in legal fees on the E.S. & C.M. case alone, according to Neverdousky.

If the city does have to pay E.S. & C.M., it’s not clear where that money will come from. The city has not budgeted for that possibility and will probably have to set up a reserve fund, according to Neverdousky.

“It’s one of those things you don’t necessarily want to budget for,” Neverdousky said. “It’s kind of like admitting defeat.”

Scott Shanes, attorney representing the city of Willow Park in the case, did not return several messages seeking comment by deadline.

The E.S. & C.M. lawsuit is one of two involving the city currently ongoing in district court in Parker County. Willow Park, along with City of Aledo and the Parker County Appraisal District, is also currently facing a possible class action suit.

That lawsuit centers around city taxes retroactively billed to residents of two subdivisions after there was a failure to add the properties to their respective city tax rolls.

In October 2008, the appraisal district sent bills to the property owners stating that the properties had been “omitted” from the appraisal rolls for the past five years and stating that the city tax total for the previous years was due upon receipt.

After the city of Willow Park filed a collection suit in 2010 against Willow Park Village residents Todd Brennan and Valerie Smith, the owners of one of the affected properties, 13 property owners took the three entities to court over the taxing issue. They hope to have the lawsuit certified as a class action suit for the approximately 300 affected residents, most of whom paid the bills.

An appeal of the Second Court of Appeals decision that the homeowners’ case could be heard in Parker County district court is currently pending in the Texas Supreme Court.