The city will pay $579,500 to a general contractor instead of going to court over problems associated with improvements at the Douglas boat harbor, city officials said Tuesday.
The contractor, BOSS Construction of Bellingham, Wash., sued the city March 11, 2003, in Alaska Superior Court after it claimed to have lost $2 million on the $2.4 million project.
In 2001, the city hired BOSS to dredge sediments to create expanded moorage for boats, deposit sediments in a contained fill area, and build a new boat launch ramp and parking pad on the contained fill. During construction, BOSS encountered problems dredging dense soils in the harbor basin. In the lawsuit, BOSS claimed that the soils were denser than indicated in the bid documents, which included engineering plans prepared by Peratrovich, Nottingham & Drage, an engineering firm with offices in Juneau, Anchorage and Seattle.
The city brought PN&D into litigation as a third-party defendant. The city felt that PN&D should share in the financial responsibility if BOSS's claims were true, City Attorney John Hartle said Tuesday.
The city agreed to drop claims against PN&D as part of the settlement. BOSS and PN&D entered into a separate agreement in connection with the case, Hartle said.
Hartle was not privy to the agreement, he said, and officials at the companies were not talking Tuesday.
Alan Christopherson, an owner at PN&D, said the parties signed a non-disclosure agreement and declined comment. BOSS did not return a phone call by press time.
Hartle said the settlement was cheaper than the estimated $3 million the city risked if it went to court and lost.
"We settled it early in the litigation," Hartle said. "That was the whole point, because this case was going to be huge."
If the case went to court, Hartle said it would have meant bringing in a range of experts and the case could have gone on for years.
"We could have settled it early or later," Hartle said. "It was just about money. What was the best deal for the taxpayers."
Although BOSS claimed the problems cost it $2 million, the company settled for less because it too had to consider legal fees, Hartle said.
The city is self-insured and has a risk management fund to pay for lawsuits, Hartle said.
City Manager Rod Swope said since the project was on city property, the city had to bear the cost of increased and unanticipated expense of completing the project.
"... It's all a part of doing business," Swope said. "We did the right thing by settling. This clears away an outstanding risk to the city and I'm glad to have this behind us."
Despite problems with the project, it was completed and "turned out really well," Swope said.
Tara Sidor can be reached at firstname.lastname@example.org.