The defendants in the Municipality of Anchorage’s lawsuit over its failed port expansion project have banded together to demand the city’s claim for monetary damages be tossed because they contend it has yet to specify what exactly it seeks to recoup.
Attorneys for Anchorage-based PND Engineers filed a joint summary judgment motion in U.S. District Court of Alaska Nov. 21 on behalf of co-defendants Integrated Concepts and Research Corp. and GeoEngineers, a Seattle-based firm that consulted on the long-dead project.
The group alleges the municipality’s damages claim contains numerous “fatal flaws” that will keep it from being successful at trial, which is currently scheduled to begin next April.
Chief among their arguments is that Anchorage has yet to detail who owes it money, and how much, in its lawsuit filed more than three years ago.
The Municipality of Anchorage filed suit in March 2013 against dock designer PND, which owns the patent for the Open Cell Sheet Pile used in the Port of Anchorage Intermodal Expansion Project; the project management firm ICRC, formerly owned by Alaska Native corporation Koniag Inc.; and CH2M, which bought VECO Alaska, another engineering firm with a small consulting role in the effort.
GeoEngineers was brought into the fray later.
Work on the project — started way back in 2003 — was halted in 2010 and never resumed after extensive damage to installed sheet pile was discovered.
PND has been adamant that the damage was due to faulty installation, noting the proprietary sheet pile design has been used widely at ports across Alaska.
The municipality’s case is based at least in part on a CH2M study finalized in early 2013 that deemed the sheet pile dock system unsuitable for use at the port.
Anchorage settled out of court with Quality Asphalt Paving and MKB Constructors, who installed the Open Cell Sheet Pile, for a combined $10.6 million earlier this year.
Municipal attorneys said during oral arguments in 2014 that they were seeking upwards of $340 million total from this lawsuit and another filed in February 2014 against the U.S. Maritime Administration, or MARAD, the federal agency that Anchorage ceded control over the project to early in order to help attract federal funding.
Up to $300 million of that was expected to come out of the suit against the private contracting firms, they said at the time.
A 2014 Inspector General report was highly critical of MARAD’s handling and lack of oversight at Anchorage and other large port projects it has handled across the country. The Anchorage project was the first such port construction the federal agency had managed.
The municipality’s original and amended complaints, the latter filed more than a year later, both cite damage claims “in excess of $100,000 for each defendant.”
By the time the project was stopped, $439 million had been approved for the project in federal, state and municipal funds; about $132 million went unspent.
A July 2016 report commissioned by the municipality for the lawsuit found it is owed at least $180 million, but the defendants still assert no damage figures have been tied to specific parties.
Municipal attorneys, traveling to conduct depositions in the lawsuit, could not respond to questions about the damage claims in time for this story.
Additionally, the defendants note that approximately $134 million specified in the July 2016 report would be used for a new dock structure as part of the scaled back construction project Anchorage has since undertaken at its aging port.
“In other words, (the municipality) is seeking to have its new vision for the port built entirely at the cost of the defendants in this matter, in addition to recovering all money spent on the original design and construction of the port, all money spent to fix the work performed on the project, and all money that might be spent in the future to rip out the original project,” the defendants’ motion states.
Further, they note that the municipality “maintains in a separate lawsuit that some or all of the same damages at issue in this litigation are the sole responsibility of MARAD.”
The group of defendants also contends the city government has no right to recover state and federal dollars spent on the project; and neither the state nor the feds have sued the contractors to get that money back.
According to a 2012 municipal report to the state Legislature, Anchorage put up $80.3 million, split about equally in debt and equity, on the original project.
Finally, the defendants argue the memorandum of understanding signed by MARAD officials and then-Anchorage Mayor George Wuerch in 2003 to give management of the project on the city-owned port to the federal agency also turned control of the project’s money to MARAD, meaning the municipality has no right to the funds later.
“Congress never intended (the municipality) to have such an unrestricted right to those federal funds and (the municipality’s) attempt to recover ‘lost’ federal funds, if successful, would result in a fundamental change to the character and purpose of the federal funds that were appropriated by Congress for the PIEP,” the motion states.
The departments of Defense and Transportation contributed $138.6 million to the Port of Anchorage Intermodal Expansion Project. The State of Alaska spent about $219 million through capital budget appropriations and a $50 million worth of general obligation bonds.
Elwood Brehmer is a reporter for the Alaska Journal of Commerce and can be reached at elwood.brehmer@alaskajournal.com.
